USDe Declines 24% in November as Fiat-Backed Stablecoins Increase Popularity

Ethena’s synthetic-dollar stablecoin USDe experienced one of its most significant contractions this month, while fiat-backed stablecoins such as USDT, USDC, and PYUSD drew billions in inflows.

According to CoinGecko, Ethena’s USDe stablecoin dropped from a market capitalization of $9.3 billion on November 1 to $7.1 billion by November 30. The token saw approximately $2.2 billion in redemptions, reflecting a 24% reduction in supply for the month of November.

Ethena’s USDe is a synthetic stablecoin that maintains its dollar peg through trading strategies employing crypto and futures contracts instead of holding physical dollars. The outflows from USDe indicate that users are likely selling on the open market, withdrawing from pools, or unwinding their positions on decentralized applications (DApps).

As of this writing, CoinGecko data indicates that the total stablecoin market cap stands at $311 billion, with US dollar stablecoins making up the bulk at $303 billion of that total.

USDe outflows follow October depeg

The contraction of USDe in November follows a depegging event on the Binance crypto exchange. During this period, USDe briefly fell to $0.65 on the exchange.

Ethena’s founder, Guy Young, explained that the drop was due to a Binance-specific oracle issue, not a flaw in USDe’s underlying collateral mechanism.

Young stated that the minting and redemption functions for USDe worked “perfectly” during this incident, with about 2 billion tokens redeemed across decentralized finance (DeFi) platforms.

On October 9, the USDe market cap was around $14.8 billion, making it the third-largest stablecoin at that time. Since then, it has seen a decline of over 53% in its market capitalization.

Currently, CoinGecko data reveals that USDe’s total valuation is at $6.9 billion, placing it in the fourth position in the stablecoin market cap rankings.

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 this month, fiat-backed stablecoins saw modest yet steady gains concurrently.

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

PayPal USD (PYUSD) experienced the strongest growth among major dollar-pegged stablecoins, jumping from $2.8 billion to $3.8 billion in November. This represents a $1 billion inflow for the month, translating to a 35% month-on-month growth.

DefiLlama data demonstrated that the PayPal PYUSD stablecoin has expanded over 216% since September when it had a market cap of $1.2 billion, indicating a $2.6 billion increase over three months.

Ripple’s (RLUSD) stablecoin, which surpassed a market capitalization of $1 billion for the first time in November, continued its upward trend during the month.

CoinGecko reported that RLUSD increased from a $960 million market cap on November 1 to $1.26 billion by November 30, reflecting a $300 million rise.