Ethena’s synthetic dollar-pegged stablecoin, USDe, suffered one of its most significant reductions recently, while fiat-backed alternatives such as USDT, USDC, and PYUSD drew billions in new investments.
Data from CoinGecko indicated that the market capitalization of the USDe token dropped from $9.3 billion on November 1 to $7.1 billion by the end of the month, experiencing redemptions close to $2.2 billion—a 24% contraction in supply.
USDe is categorized as a synthetic stablecoin that achieves its dollar peg via trading strategies involving cryptocurrencies and futures contracts instead of maintaining actual USD reserves. The reductions in USDe’s circulation indicate users are either trading it on exchanges, withdrawing from liquidity pools, or liquidating their positions in decentralized applications (DApps).
As reported, the overarching stablecoin market capitalization stood at $311 billion, dominated by dollar-pegged stablecoins accounting for approximately $303 billion.
USDe Withdrawals Follow October’s Depeg
The recent decrease in USDe’s market share followed an incident earlier in October where the synthetic stablecoin faced a depeg situation on Binance, with values briefly dropping to $0.65. Guy Young, Ethena’s founder, attributed this dip to an oracle issue specific to Binance rather than an inherent flaw in USDe’s collateralization mechanism. He noted that USDe’s minting and redeeming capabilities worked flawlessly during the incident, facilitating around 2 billion tokens redeemed across various decentralized finance (DeFi) platforms.
As of mid-October, USDe held a market position as the third-largest stablecoin, valued at $14.8 billion, but has now lost over 53% of that valuation. Current statistics show USDe’s market cap is down to $6.9 billion, ranking it in fourth among stablecoins.
Growth of Fiat-Backed Stablecoins
While USDe has struggled in recent months, traditional fiat-backed stablecoins have shown steady increases. Notably, Tether’s USDT improved by $1.3 billion to reach $184.6 billion, and Circle’s USDC rose to $76.5 billion, adding roughly $600 million in growth.
Currently, the PayPal USD (PYUSD) has seen the largest increase, moving from $2.8 billion to $3.8 billion—a whopping 35% month-on-month rise, with a total inflow of $1 billion.
Recent data reported that the PayPal PYUSD stablecoin’s market cap has surged by over 216% since September when it was valued at $1.2 billion.
Ripple’s RLUSD stablecoin also demonstrated growth, with its market cap rising from $960 million at the beginning of November to $1.26 billion at the end of the month.
