Cathie Wood, CEO of ARK Invest, publicly named Binance as the culprit behind the cryptocurrency market crash on October 10th last year. In response, blockchain researcher Yu Zhe'an released a new analysis report , pointing out that the decoupling of the stablecoin USDe during the event and the subsequent massive capital flight revealed a deep structural contradiction between exchange pricing sovereignty and the Ethena protocol mechanism.
As of today, USDe's cumulative net redemptions have reached $8 billion, and its issuance size has almost returned to the level before Ethena began its aggressive expansion.
USDe redemption surge is unusual: post-event redemptions are three times the current rate at the time of decoupling.
In his report, Yu Zhe'an pointed out that redemptions triggered by stablecoin decoupling are common in the market, but the USDe case is extremely unusual. Within three trading days after Binance crashed and triggered decoupling, the redemption volume was approximately $2 billion; however, after the price stabilized, the redemption wave did not stop, and the cumulative outflow after the decoupling event ended was three times that at the time of decoupling.
This phenomenon reflects a erosion of market trust in USDe as the core mechanism for contract margin. The report analyzes USDe's minting and redemption data, showing that minting activity has almost come to a standstill since October 9th. This is because the secondary market price has remained below or equal to $1 for an extended period, eliminating arbitrage opportunities in the primary market and leading to a continuous decline in issuance.
On-chain surveillance: Who is dumping USDe?
To clarify the flow of funds, researchers analyzed the changes in the top 200 holding addresses at Ethereum block heights (Sep-29 and Nov-9) in an attempt to identify the participants in this massive exodus.
Data shows that exchange users and related asset management accounts were the main drivers of this sell-off:
- Exchange users: The net growth contribution rate was -38.56%, indicating that retail and institutional investors withdrew a large amount of funds from centralized exchanges.
- Whale exceeding 100 million yuan: These addresses exhibit a high degree of interaction with exchange hot wallets, suggesting they are asset management accounts of the exchanges. If included, the withdrawal of funds related to exchanges would contribute as much as 45.89%.
- DeFi protocols: Almost all derivative protocols, including Pendle and Aave, have withdrawn; only Fluid protocol and Curve pool show an increase in holdings due to passively absorbing selling pressure.
Core cause of the crash: The double-edged sword of closed pricing systems
The report provides an in-depth analysis of the trigger that ignited this crisis: Binance's closed pricing mechanism.
On October 11, Binance's spot market decoupled USDe from its platform. Since its contract margin pricing relied entirely on in-platform transaction prices without using external oracles for cross-sampling, this amplified the in-platform liquidity imbalance into a systemic liquidation risk.
Why doesn't Binance use external oracles? Yu Zhe'an analyzes that this is a choice between pricing sovereignty and commercial interests. If external oracles are used, the price will be locked around $1, significantly compressing the exchange's internal market-making, leverage adjustments, and spread trading profits. If internal pricing is maintained, while preserving the business model of profiting from volatility, fair value is sacrificed under extreme market conditions, leading to a collapse of trust.
In its subsequent announcement, Binance only emphasized strengthening risk control and did not mention introducing external quotes, indicating that it still insists on maintaining its pricing sovereignty.
Stalemate over profit distribution: The core conflict between Binance and Ethena
Beyond the pricing mechanism, the report also revealed potential business maneuvering. When the price crashes within Binance, arbitrageurs should theoretically enter the market (buying low-priced USDe externally and redeeming it on Binance). However, unlike other exchanges, Binance did not integrate Ethena's primary market subscription and redemption functionality into its platform. Yu Zhe'an speculates that this may stem from a disagreement between the two parties regarding the distribution of profits from primary market trading qualifications.
- Binance's stance: It may want to monopolize or control who can execute risk-free arbitrage.
- Ethena's position: We hope to open up more primary dealer qualifications to ensure liquidity.
This impasse leads to the disruption of arbitrage channels during crises (requiring withdrawals to the blockchain, which are subject to withdrawal limits and network congestion), ultimately rendering USDe's price stabilization mechanism ineffective.
This article, "Who Killed USDe? The Truth Behind the $8 Billion Retreat: The Structural Contradictions Between Pricing Sovereignty and the Protocol," first appeared on ABMedia, a ABMedia .
