Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
USDe's total value locked drops by 50% even as onchain activity remains strong, highlighting the vulnerability of DeFi yields

USDe's total value locked drops by 50% even as onchain activity remains strong, highlighting the vulnerability of DeFi yields

Bitget-RWA2025/11/25 23:52
By:Bitget-RWA

- Ethena's USDe stablecoin TVL fell 50% to $7.6B amid yield compression and unwinding leveraged carry trades, despite rising onchain transaction volume. - The synthetic stablecoin's 5.1% APY now lags Aave's 5.4% USDC borrowing rates, triggering outflows as leverage strategies become unprofitable. - Collapsing 10x leverage loops and maturing perpetual tokens accelerated TVL decline, exposing fragility of yield-bearing stablecoins in risk-off markets. - Chaos Labs recommends lowering Aave V3 stablecoin borro

Due to shrinking yields, Ethena's

stablecoin has seen its total value locked (TVL) drop by half, even as onchain transaction activity has increased, . This synthetic stablecoin, which generates returns from perpetual futures funding rates, currently holds $7.6 billion in TVL—a sharp decline from $14.8 billion in October 2025—as leveraged carry trades unwind in a tighter market. The growing gap between TVL and usage points to the vulnerability of yield-focused stablecoins in decentralized finance (DeFi), to changes in risk sentiment and liquidity conditions.

USDe operates by keeping a 1:1 peg with the U.S. dollar, using crypto collateral and shorting perpetual futures to capture funding rate differentials as yield. Although the stablecoin currently provides a 5.1% APY—

seen earlier this year—its returns have been squeezed by lower funding rates and waning demand for leverage. The decline has picked up pace as borrowers on platforms like are now charged 5.4% for , which is higher than USDe’s APY and that previously fueled TVL growth.

The unwinding of leveraged looping strategies—where users repeatedly deposited and borrowed to reach up to 10x leverage—has further accelerated outflows. Once a key driver of DeFi capital efficiency, these strategies lost their appeal as yields dipped below borrowing costs. Furthermore, the expiration of Ethena’s November perpetual tokens (PTs) has

, further reducing the appetite for stablecoin leverage.

Even with the TVL drop, USDe continues to see strong onchain activity, with

over the past month. This indicates that the token still has practical demand, despite a decline in speculative use. Still, the broader DeFi sector is grappling with fundamental issues, as protocols find it difficult to maintain yield models in a risk-averse climate. Some projects have already ended stablecoin farming initiatives, of yield-generating assets in the long run.

Chaos Labs, which manages risk for Aave V3, has

from 6.0% to 5.5% to better reflect current market conditions and help stabilize utilization rates. This move is intended to slow further TVL losses by making rates more competitive and attracting organic borrowing as liquidity from PT maturities returns to the system.

The story of USDe’s

illustrates the double-edged sword of DeFi innovation: mechanisms that drive rapid growth in bullish markets can also accelerate declines during downturns. As , stablecoin creators and DeFi platforms must carefully balance user incentives with overall system stability to prevent widespread liquidity risks.

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

Bitcoin Updates: ARK Bucks Crypto Slump, Increases Holdings in CoreWeave and Bullish Stocks

- ARK Invest boosted crypto stock holdings by $39M in late 2025, acquiring CoreWeave , Circle , and Bullish amid market declines. - The firm's $31. 3M CoreWeave stake highlights confidence in AI cloud infrastructure, despite the company's widening losses amid rapid scaling. - Contrary to $3.79B crypto ETF outflows and Bitcoin's "death cross," ARK's "buy the dip" strategy reflects long-term optimism about crypto infrastructure. - Mixed reactions emerged as analysts warned about CoreWeave's debt risks, while

Bitget-RWA2025/11/26 04:30

Ethereum Updates: BitMine Anticipates Ethereum Rebound Despite Indicators Pointing to a Fall Below $2,000

- Ethereum’s MVRV metrics signal a potential 28% price drop below $2,000, citing historical patterns in 0.8x RP band breaches. - BitMine plans to stake 3.55M ETH via MAVAN and announced a $0.01 dividend, betting on Ethereum’s discounted recovery despite $4B unrealized losses. - Europe’s 3x leveraged ETFs and NUPL nearing 0.25 threshold amplify volatility, risking deeper bearish trends as ETH struggles to defend $3,000.

Bitget-RWA2025/11/26 04:30
Ethereum Updates: BitMine Anticipates Ethereum Rebound Despite Indicators Pointing to a Fall Below $2,000

Ethereum News Today: How Toaster Technology is Fueling Ethereum’s Climb Toward $80,000

- Ethereum's Pectra upgrade and zkSync's Airbender prover breakthroughs enhance scalability, enabling gigagas-level throughput and slashing proof costs to $0.0001 per transfer. - Institutional adoption grows with 3x leveraged ETH ETFs and $1.13B June inflows, while daily ETH burns tighten supply and drive prices toward $2,200 post-upgrade. - Analysts project ETH could reach $80,000 as Layer-2 solutions handle 60% of DeFi transactions, combined with deflationary dynamics and ETF-driven demand. - Challenges

Bitget-RWA2025/11/26 04:30

Bitcoin News Today: Investors Shift $3.79B into Altcoins Amid Bitcoin ETF Outflows

- U.S. Bitcoin ETFs recorded $3.79B outflows in Nov 2025 as investors shifted to altcoins like Solana and XRP . - BlackRock's IBIT and Fidelity's FBTC led redemptions, with single-day outflows exceeding $523M. - Analysts attribute the sell-off to profit-taking after Bitcoin's October peak and macroeconomic pressures. - Ethereum ETFs also faced $1.79B outflows but showed recent stabilization amid market shifts. - Concerns grow over Bitcoin's ETF-driven rally sustainability amid thinning liquidity and price

Bitget-RWA2025/11/26 04:10
Bitcoin News Today: Investors Shift $3.79B into Altcoins Amid Bitcoin ETF Outflows