USDe's total value locked drops by 50% even as onchain activity remains strong, highlighting the vulnerability of DeFi yields
- Ethena's USDe stablecoin TVL fell 50% to $7.6B amid yield compression and unwinding leveraged carry trades, despite rising onchain transaction volume. - The synthetic stablecoin's 5.1% APY now lags Aave's 5.4% USDC borrowing rates, triggering outflows as leverage strategies become unprofitable. - Collapsing 10x leverage loops and maturing perpetual tokens accelerated TVL decline, exposing fragility of yield-bearing stablecoins in risk-off markets. - Chaos Labs recommends lowering Aave V3 stablecoin borro
Due to shrinking yields, Ethena's
USDe operates by keeping a 1:1 peg with the U.S. dollar, using crypto collateral and shorting perpetual futures to capture funding rate differentials as yield. Although the stablecoin currently provides a 5.1% APY—
The unwinding of leveraged looping strategies—where users repeatedly deposited and borrowed to reach up to 10x leverage—has further accelerated outflows. Once a key driver of DeFi capital efficiency, these strategies lost their appeal as yields dipped below borrowing costs. Furthermore, the expiration of Ethena’s November perpetual tokens (PTs) has
Even with the TVL drop, USDe continues to see strong onchain activity, with
Chaos Labs, which manages risk for Aave V3, has
The story of USDe’s
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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