USDe Sees 24% Decline in November as Fiat-Backed Stablecoins Rise in Popularity

Ethena’s synthetic-dollar stablecoin USDe has experienced one of its most significant monthly declines, while fiat-backed stablecoins such as USDT, USDC, and PYUSD attracted billions in investments.

Data from CoinGecko indicates that Ethena’s USDe stablecoin dropped from a market cap of $9.3 billion on November 1 to $7.1 billion by November 30. This drop involved approximately $2.2 billion in redemptions, resulting in a 24% decrease in supply throughout November.

USDe is a synthetic stablecoin that keeps its dollar value through trading strategies involving cryptocurrency and futures contracts instead of holding actual dollars. The outflows from USDe indicate that users are either selling USDe on the market, withdrawing from liquidity pools, or closing their positions on decentralized applications (DApps).

As of now, CoinGecko data reveals that the total stablecoin market capitalization is $311 billion, predominantly held by US dollar stablecoins, which represent $303 billion of that total.

USDe outflows follow October depeg

The contraction of USDe in November follows a depegging incident on the Binance exchange in October, where USDe temporarily fell to $0.65.

Guy Young, the founder of Ethena, attributed the drop to a Binance-specific oracle issue and not to any failure in the underlying collateral mechanism that supports USDe.

According to Young, the minting and redemption processes for USDe worked “perfectly” during this incident, with around 2 billion tokens redeemed across decentralized finance (DeFi) platforms.

On October 9, USDe’s market cap was around $14.8 billion, making it the third-largest stablecoin at that time. Since then, it has lost over 53% of its market value.

Currently, CoinGecko data shows that USDe is valued at $6.9 billion, placing it fourth in the stablecoin market ranking.

Related: Lawmakers stumble on stablecoin terms as US Congress grills Fed’s Bowman

Fiat-backed stablecoins increased by $3.2 billion in November

While the synthetic-dollar stablecoin faced challenges, fiat-backed stablecoins saw consistent gains during the same period.

Tether’s USDt (USDT) gained $1.3 billion, reaching $184.6 billion, while Circle’s USDC (USDC) increased to $76.5 billion, adding about $600 million to its total.

PayPal USD (PYUSD) showed the most significant growth among major dollar-pegged stablecoins, rising from $2.8 billion to $3.8 billion in November, marking a $1 billion influx and a 35% increase month-on-month.

Data from DefiLlama indicates that PayPal’s PYUSD stablecoin has grown by more than 216% since September when it had a market cap of $1.2 billion, representing a $2.6 billion increase in the past three months.

Ripple’s (RLUSD) stablecoin surpassed a market cap of $1 billion for the first time in November and continued to grow throughout the month.

According to CoinGecko, RLUSD’s market cap increased from $960 million on November 1 to $1.26 billion by November 30, an increase of $300 million.