Ethena's USDe Stablecoin Sees Significant TVL Decline

According to ChainCatcher, the total value locked (TVL) of Ethena's synthetic stablecoin, USDe, has experienced a significant drop from $14.8 billion in October to $7.6 billion, marking a decline of over 50%. The sharp decrease is primarily attributed to the unwinding of leveraged loop strategies in decentralized finance (DeFi) protocols, particularly in lending markets like Aave. Currently, the yield on USDe, approximately 5.1%, has fallen below the borrowing cost of USDC on Aave, which stands at 5.4%, prompting some participants to close their positions. Despite the decline in TVL, the usage of USDe is on the rise, with on-chain transaction volumes exceeding $50 billion last month. This indicates that even as speculative positions are gradually unwound, the stablecoin's utilization continues to grow.