Ahmet Bedirhan Arvas 
Everyone knows Ethena Labs, the organization behind the $ENA token, and the company also operates a stablecoin named USDe. On the night of October 10 — a night many in the crypto community remember with fear — the USDe stablecoin lost its stability and fell below $0.99. This situation is referred to as a “peg” event in the crypto world.
Ethena Labs has proposed a plan to preserve USDe’s peg stability by repurchasing and burning approximately $95 million worth of USDe — equal to about 1.2% of its current collateral assets — whenever the secondary market price falls to $0.99 or below.
Will This Move Work?
According to the statement from Ethena Labs, the event was not a global de-peg but rather an issue isolated to Binance, caused by liquidity and oracle discrepancies. When examining other platforms during the same period, USDe maintained its stability with almost no price change.
If the strategy proposed by Ethena Labs is implemented, the repurchased USDe will be burned, meaning they will be permanently removed from circulation. This will reduce the circulating supply and create a stronger support level for maintaining price stability.
This article may also interest you: NVIDIA Earnings Report Released! | AI Bubble Concerns!
Will the Proposal Be Approved?
The Ethena Risk Committee will evaluate this strategy under its governance framework and submit it to a management vote. If approved, buybacks will be carried out through a bidding process between Ethena and centralized exchanges. After bids are accepted, settlements will take place off-exchange, minimizing deposit collateral risks for exchanges.
How Will $USDe Be Affected?
A buyback of this scale would create strong price support for USDe, helping prevent potential de-peg events. As approximately 1.2% of the circulating supply gets removed, the overall collateral ratio of USDe would improve.
For the latest crypto news, click here.