07 Nov, 2025

The Stablecoin Depegging Crisis: Who’s Exposed, Who Survives?

A storm of trust and transparency is sweeping across the crypto world.“When everything that could be borrowed with USDX was borrowed.”This warning post on X (formerly Twitter) on November 6 marked the start of a long-brewing stablecoin crisis finally breaking to the surface.On DeFi lending protocols such as Euler, nearly all assets that could be borrowed against USDX and sUSDX were drained. Borrowing rates in some pools spiked past 800% APY.Meanwhile, on-chain addresses linked directly to Stables Labs founder Flex Yang began aggressively borrowing other stablecoins and transferring them to exchanges — an alarming move that triggered widespread market panic.The USDX Depeg: A Real-Time BreakdownThe USDX depegging event served as a mirror, reflecting the fragility of decentralized stablecoins under extreme market stress.▪ USDX, issued by usdx.money, completed a $45 million funding round at a $275 million valuation late last year.▪ Like Ethena’s USDe, USDX adopts a delta-neutral hedging strategy, but unlike Ethena, it also uses altcoins as part of its trading strategy — amplifying returns, but also risk.▪ Before the meltdown, addresses directly linked to Stables Labs’ founder began showing unusual on-chain behavior: ignoring soaring borrow rates, these wallets drained all assets available for borrowing against USDX and sUSDX across multiple platforms.Notably, one address beginning with 0x50de started accumulating large amounts of USDX and sUSDX in late October and proceeded to borrow USDT, USDC, and USD1 from Euler, Lista DAO, and Silo, transferring nearly all funds to Binance shortly after borrowing.When it ran out of collateral to leverage, the address swapped USDX for USDT on PancakeSwap and again moved the proceeds to exchanges. This fire-sale exodus raised serious concerns about the true reserve backing of USDX.The Cautionary Tale of USDeUSDX isn’t the first synthetic stablecoin to face depegging risk. On October 11, USDe — the world’s third-largest stablecoin — plummeted to $0.65, losing roughly 34% of its peg.That day, the crypto market experienced an “epic crash.”Bitcoin tumbled from $117,000 to $105,900, a single-day drop of 13.2%.▪ On Uniswap, liquidity in the USDe–USDT pool collapsed to $3.2 million, down 89% from pre-event levels. A sell order of 100,000 USDe experienced 25% slippage, filling at $0.62 instead of $0.70.▪ Unlike USDX, USDe quickly rebounded, recovering to $0.98 within hours.▪ The recovery was fueled by Ethena Labs’ third-party reserve attestation, confirming a collateralization ratio above 120%, backed by $66 million in excess collateral.▪ Most importantly, USDe’s redemption mechanism remained fully operational — users could redeem ETH and BTC collateral anytime, anchoring market confidence during the crisis.The Security Spectrum of StablecoinsComparing USDX, USDe, and traditional fiat-backed stablecoins like USDT and USDC reveals a clear hierarchy of safety.The takeaway: transparency and collateral quality directly determine stability.USDX’s opaque structure and questionable backing made it vulnerable, while USDe’s transparency and robust reserves allowed for a swift recovery.Structural Risks in DeFiThe USDX and USDe depegging episodes exposed deeper structural flaws within the DeFi ecosystem.Delta-neutral stablecoins are not truly stablecoins in the traditional sense — they function more like structured financial derivatives of a protocol rather than independent monetary units.Key issues include:▪ High-risk strategies & opaque executionUSDX’s complex delta-neutral model extended into altcoins, heightening exposure. Most of these strategies run off-chain on centralized exchanges, turning the project into a black box with no verifiable transparency.▪ Inter-protocol leverage and recursive collateralizationDeFi protocols are deeply interwoven. Some synthetic assets are built on top of themselves, creating recursive leverage loops. For example, crvUSD can use a stablecoin derivative of crvUSD as its own collateral to mint more crvUSD — making it nearly impossible to trace how much leverage exists even when all data is on-chain.Why Large Stablecoins Remain More ResilientGiven USDX’s collapse and USDe’s brief depeg, investors are asking:Why do giants like USDT and USDC remain stable?▪ Scale and institutional adoptionAccording to CertiK’s 2025 Skynet Digital Asset Treasury Report, publicly listed companies now hold over $130 billion in digital assets.Institutional investors prefer audited, custody-backed stablecoins with regulatory compliance and transparent disclosures — a moat that protects USDT and USDC.▪ Regulatory alignment and disclosureCircle, issuer of USDC, proactively engages with regulators and regularly publishes reserve breakdowns.In contrast, USDX and similar projects lack third-party audits or reserve proofs, eroding market trust.▪ Collateral quality and redemption mechanismsUSDT and USDC are backed by fiat, cash equivalents, and short-term U.S. Treasuries — highly liquid, low-volatility assets.Synthetic stablecoins like USDX rely on crypto-collateral and off-chain hedging, which can collapse under market stress.When volatility spikes, capital naturally migrates toward safety — from high-risk synthetic coins to fiat-backed stalwarts like USDT and USDC.Even after Bybit’s recent hack, over $4 billion in institutional inflows entered the market, reaffirming long-term confidence in quality crypto assets.In the end, while DeFi innovation continues to push boundaries, one truth remains unchanged: In finance — whether on-chain or off — security and transparency are the ultimate foundations of trust.

03 Nov, 2025

Monthly Ethereum Stablecoin Volume Hits Record $2.8 Trillion in October

The total monthly stablecoin volume on Ethereum soared to hit a new all-time high in October, as traders increasingly sought yield opportunities during the crypto market slowdown.According to The Block's data, stablecoins on Ethereum saw a total of $2.82 trillion in onchain volume in October, surpassing the previous all-time high of $1.94 trillion set in September. This marks a 45% monthly growth.Circle's USDC took the lead with $1.62 trillion in monthly volume, followed by USDT, which had a volume of $895.5 billion last month. Both stablecoins saw an increase in volume from the previous month.Meanwhile, MakerDAO's DAI stablecoin ranked third with $136 billion, down from $141.2 billion in September and significantly lower than May's $470.7 billion."Stablecoins have been one of the hottest sectors over the past couple of months following the Circle IPO and the passage of the Genius Act," said Min Jung, research associate at Presto Research. "Yield farming, especially around 'liquid yield tokens,' has been highly active, and new stablecoins with innovative concepts are attracting users seeking yield."Stablecoin volume rose last month as the crypto market retreated from its record-setting bull run toward more modest pricing. Bitcoin is down 11.5% in the past month to $108,229, while Ethereum is down 16.4% to $3,754.Kronos Research CIO Vincent Liu noted that stablecoin volume surge indicates that traders were actively managing liquidity, preparing to buy price dips amid ongoing profit-taking in major cryptocurrencies."They're staging capital to rotate between emerging narratives, using stablecoins as a hedge and a yield-generating tool until deployment," Liu said.The surge in volume positioned stablecoin issuers as the dominant revenue generators among crypto protocols, data shows.Stablecoin issuers consistently managed around 65% to 70% of total daily revenue across major crypto protocol categories throughout October, beating others including lending platforms, decentralized exchanges, collateralized debt positions, and blockchain infrastructure.Major issuers Tether and Circle base their earnings on the assets that back their stablecoins. They hold user deposits in relatively low-risk instruments like U.S. Treasuries and keep the accrued interest, making yield on reserves their core profit source."[October's] volume underscores a maturing crypto market, where stablecoin activity has grown for non-speculative use cases like payments and cross-border transactions," said Nick Ruck, director at LVRG Research.