TLDR
- USDe lost $700 million in redemptions within seven days after stablecoin failures.
- The market cap has fallen by more than $5.4 billion since October 11, 2025.
- The collapse of xUSD and deUSD triggered fear across yield-bearing stablecoins.
- USDe’s delta-hedging model faced pressure as investors rushed to exit.
Investors across DeFi watched a sharp turn in sentiment this week as Ethena’s USDe faced a large wave of redemptions. The exit of $700 million in only seven days sent a strong signal to markets already dealing with stress from other stablecoin failures. Traders who had followed the growth of yield-bearing stablecoins reacted fast as concerns spread about the safety of complex models. Market groups turned their attention to liquidity, risk, and near-term stability.
USDe Faces Heavy Redemptions After xUSD and deUSD Failures
Ethena’s USDe saw more than $700 million in redemptions in the first week of November. Data from Tom Wan and Wu Blockchain showed that the withdrawals accounted for an estimated 10 to 15 percent of its circulating supply. The wave came soon after the collapse of xUSD and deUSD, which raised new concerns for yield-bearing stablecoins.
The failures of xUSD and deUSD helped trigger the reaction. xUSD lost its dollar peg after redemptions were halted, and deUSD fell due to its direct link to xUSD. The rapid collapse of both projects reduced confidence across the DeFi market and sent investors toward fast withdrawals. Analysts said the events exposed weak liquidity and poor risk controls in some stablecoin models.
Market Cap Drops by Over $5.4 Billion in One Month
Ethena’s USDe has seen its market cap fall sharply since October 11, 2025. Reports show that more than $5.4 billion in value has been erased during this period. The supply has now fallen from an estimated $7 billion to around $1.6 to $2 billion. This drop shows the scale of the exit and the pressure faced by yield-bearing stablecoins.
Investors noted that stablecoins with complex yield engines often face stress during rapid redemption cycles. History has shown that tokens with heavy dependency on derivatives or staked collateral may face sharp declines once liquidity drops. Market groups said the current fall matches patterns seen in earlier failures across the DeFi sector.
USDe’s Delta Hedging Model Meets New Pressure
USDe is backed by an Ethereum delta-hedging model. This structure uses derivatives to manage exposure to staked Ethereum. Market observers said the model can face stress during periods of fast price swings or low liquidity. The recent fall in Ethereum prices has added another layer of pressure on the system.
The model drew attention because similar mechanisms have failed before during heavy market stress. The collapse of algorithmic stablecoins in earlier years has left many investors cautious. Some analysts said the current redemptions show how vulnerable complex systems can be when large holders try to exit at once.
Growing Fear Around Yield Stablecoins Adds New Stress
The exit from USDe reflects a wider concern among traders who used yield-bearing stablecoins for income. Platforms that accepted USDe as collateral now face questions about liquidity and the speed of redemption flows. Wu Blockchain noted that ongoing uncertainty in China’s virtual currency rules also adds pressure to the broader market.
Many investors now watch reserve data, market depth, and redemption speeds to judge near-term stability. The DeFi market is still dealing with the fallout from xUSD and deUSD, and traders continue to monitor conditions as USDe moves through a period of heavy stress.
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