The truth about USD depeg big dump to 0.65 USD: Oracle Machine vulnerability or a coordinated attack?

The USDe depeg incident shocked the market, with prices falling from $1 to $0.65, triggering a $1 billion liquidation wave. Ethena founder Guy Young revealed that the root cause of the USDe depeg lies in the oracle machine issue at the exchange, rather than the protocol itself. Analysts question whether the USDe depeg was a meticulously planned coordinated attack, and Ethena is promoting reserve proof reforms to rebuild trust.

Complete Timeline Analysis of USDe Depeg Event

(Source: Trading View)

The USDe depeg incident occurred during the market crash on October 10, when the price of synthetic dollar tokens plummeted from $1 to $0.65 on a large centralized exchange. However, Guy Young, the founder of Ethena Labs, emphasized that the USDe depeg is an isolated issue and has nothing to do with the Ethena protocol or the fundamentals of the token.

· USDe depeg price big dump 35% amazing details

During the depeg of USDe, the price on the exchange platform plummeted to 0.65 USD, but on decentralized exchanges such as Curve, Fluid, and Uniswap, the depeg of USDe was minimal, only 30 basis points (BPS). This price difference reveals that the depeg of USDe is not a phenomenon across the entire market, but rather a technical failure of specific platforms.

Key Data Comparison for USDe Depeg:

Centralized exchange price: big dump to 0.65 USD (USD depeg 35%)

On-chain DEX price: maintained at 0.997 USD (USDe depeg only 0.3%)

24-hour redemption volume: 2 billion USD successfully redeemed

Clearing scale: 1 billion USD collateral forced liquidation

Guy Young stated that during the USDe depeg period, "the minting and redemption functions of Ethena operated perfectly, with no downtime." Within 24 hours, protocols including Curve, Fluid, and Uniswap redeemed 2 billion USD in USDe, with minimal price deviation, proving that the USDe depeg issue originated from specific exchanges rather than the protocol itself.

The depeg of USDe triggers the largest liquidation event in crypto history

The USDe depeg event coincided with the announcement of Trump’s tariffs, which triggered panic in the market, leading to the largest 24-hour liquidation event in cryptocurrency history, with $20 billion in open leveraged positions evaporating. However, Ethena insists that the USDe depeg is unrelated to the market sell-off but is due to a technical architecture flaw of the exchange.

· USDe depeg technology root cause: Oracle Machine fatal vulnerability exposed

Guy Young, the founder of Ethena, deeply analyzes the reasons behind the depeg technology of USDe, pointing out that the centralized exchange uses its own order book data as the source for the Oracle Machine, rather than referencing external price information or the deepest liquidity pools. This design flaw is the fundamental cause of the depeg of USDe.

Three Core Issues of USD depeg Oracle Machine:

Insufficient internal order book liquidity: The exchange's USDe order book has weak depth and cannot withstand large sell-off pressure when USDe depegs.

Oracle Machine data source is singular: During the USDe depeg period, the platform only referenced its own price and did not integrate data from deep liquidity pools such as Curve.

Deposit and withdrawal functions are hindered: When USD depegs, market makers are unable to complete the arbitrage loop, exacerbating price imbalance.

Guy Young emphasized: "Severe price discrepancies are limited to one venue, which quotes the Oracle Machine index on its own order book, rather than the deepest liquidity pool." He added that if the currency market Oracle Machine can reference the deepest liquidity pool globally for USDe, then the depeg of USDe would not lead to any liquidation.

· Unified Collateral System Amplifies USDe Depeg Impact

Analyst Pavel Altukhov pointed out that the exchange's "Unified Account" feature has amplified the impact of the USDe depeg. This system allows users to use assets such as USDe as collateral, and when the depeg of USDe causes the value of the collateral to fall, traders are forced to sell off to maintain margin, triggering a chain liquidation.

Altukhov stated: "When the prices of assets such as USDe and wBETH fall, traders must cover their losses and meet new margin requirements, and due to the depeg of USDe, their collateral is only half as effective." This mechanism causes the depeg impact of USDe to be exponentially magnified.

Is there a coordinated attack hidden behind USDe depeg? $90 million sell-off疑雲

Cryptocurrency trader ElonTrades proposed a shocking theory: the depeg of USDe might be a well-planned coordinated attack. The attackers exploited the Oracle Machine vulnerability of the exchange, dumping up to 90 million USD USDe on the platform, driving the price down to 0.65 USD, while simultaneously opening short positions on Bitcoin and Ethereum at Hyperliquid.

USDe depeg coordinated attack hypothetical timeline:

Step 1: Discover the Oracle Machine Vulnerability The attacker noted that the exchange would fix the Oracle Machine issue on October 14, and decided to launch an attack within the time window.

Step 2: Large USDe Sell-off Just minutes before the announcement of Trump’s tariffs, sell 90 million USD worth of USDe on the exchange, triggering the depeg of USDe.

Step 3: Open a short position Open a short position on Bitcoin and Ethereum on the Hyperliquid perpetual contract DEX.

Step 4: Market Panic Profits Trump's tariff news triggers widespread panic, USDe depeg leads to $1 billion liquidation, attackers profit approximately $192 million from short positions.

ElonTrades stated that the Oracle Machine design of the exchange is a "major flaw," and the platform has announced that it will switch to external Oracle Machine data before October 14. If the USDe depeg is indeed an attack, this would be one of the most sophisticated arbitrage operations in crypto history.

Why have DeFi protocols not been affected by the USDe depeg?

(Source: X)

Interestingly, the depeg of USDe is limited to that centralized exchange, while DeFi money markets such as Curve and Fluid adopt a "hard-coded" peg mechanism, treating USDe as equivalent to USDT or USDC (1:1). These protocols reference deep on-chain liquidity pools rather than the price from a single exchange, so the depeg of USDe has minimal impact on DeFi.

Researchers believe that it makes "a lot of sense" to peg tokens to USDT during the depeg of USDe in the DeFi market, avoiding unnecessary liquidations. However, analyst Duo Nine warned: "USDe lost its peg on the exchange, and DeFi managed to escape thanks to hard-coded pegs. The next panic could start with DeFi, and the risk of USDe depeg still exists."

· Ethena's Four Major Reform Measures in Response to USDe Depeg

After the USDe depeg incident, Ethena quickly launched transparency and Oracle Machine reform plans to prevent similar events from happening again. Founder Guy Young emphasized that the USDe depeg exposed issues with the exchange infrastructure, rather than defects in the Ethena protocol.

Ethena's core strategy in response to the depeg of USDe:

Proof of Reserve (PoR) access: Provides real-time PoR data to exchanges and Oracle Machine providers (including Chaos Labs and Chainlink) to enable on-demand verification supported by USDe.

Oracle Machine Design Guide: Release detailed technical documentation, emphasizing the need to distinguish between collateral "temporary misalignment" and "permanent impairment."

Risk management framework upgrade: Establish trigger mechanisms to automatically activate protective measures when real losses occur.

Multi-source price aggregation recommendation: Call on exchanges to adopt multi-source Oracle Machines instead of relying on a single order book data.

Tether CEO Paolo Ardoino advocated for USDT as the preferred collateral for derivatives in light of the USDe depeg incident, stating, "USDT has strong liquidity and has withstood the test. If you use tokens with lower liquidity as collateral, be prepared when the market fluctuates."

USDe depeg reveals the systemic vulnerabilities of the CeFi-DeFi

Analysts believe that the USDe depeg event reveals deeper structural issues: centralized exchange data feeds may trigger systemic pressure in the increasingly interconnected CeFi-DeFi space. Although Ethena insists that the system did not crash, the USDe depeg proves that a technical failure at a single exchange can impact the entire ecosystem.

Kris Marszalek, the CEO of a well-known exchange, called for an investigation into exchanges that have suffered huge losses due to the depeg of USDe. The industry has generally welcomed Ethena's transparency measures, but experts warn investors: while the depeg of USDe is an isolated incident, risk management for stablecoins still requires high attention.