Star Xu, founder and CEO of OKX, pointed out in the New Era Finance Podcast that Binance's promotion of USDe, issued by Ethena, as a stablecoin has issues. USDe is essentially a "tokenized hedge fund," and even with a delta-neutral strategy, it does not equate to zero risk or low risk.

He stated that Binance previously launched a user acquisition campaign offering about 12% annualized returns and allowed users to use USDe as collateral on par with USDT and USDC, lacking effective limits. Users were encouraged to exchange USDT or USDC for USDe to earn returns, then use USDe as collateral to borrow USDT, and then exchange back to USDe, creating a leveraged cycle.

This cycle pushed the apparent annualized returns up to 24%, 36%, or even over 70%, widely viewed as low risk due to being offered by a large platform; Xu believes this structure rapidly accumulates systemic risk, causing USDe to quickly decouple from the Binance order book under volatility shocks, triggering a chain liquidation.

He further pointed out that during the event on October 10, 2025 (1011), hundreds of billions of dollars in positions were liquidated, fundamentally changing the market microstructure, with some participants believing the damage exceeded that of the FTX collapse; weak risk control of assets like WETH and BNSOL further amplified the shock, with some tokens temporarily nearing zero price.

Xu emphasized that BTC prices began to drop about 30 minutes before USDe decoupled, indicating that the initial shock was a market event, but the USDe leveraged cycle amplified what could have been a stable correction into a chain liquidation; he called this a serious risk control failure, not merely an accident.

This arrangement caused yield-seeking funds to flow from traditional stablecoins into USDe leveraged positions, with the decoupling driven by events and forced liquidations leading to liquidity withdrawal and price spiral declines; the platform benefited from user acquisition and trading volume in the short term, while users holding leveraged positions, customers from other exchanges, and overall market depth faced pressure, exposing the vulnerabilities of the liquidation engine and collateral valuation mechanism.

Binance and some market participants (such as Haseeb Qureshi from Dragonfly) hold different views, believing the main drivers were macro shocks and overall high leverage, with USDe decoupling being more of a result than a root cause, mainly occurring within Binance.

Source: Public Information