Data: USDe TVL has sharply contracted by over 50%, with a surge of leveraged loop strategy liquidations in DeFi protocols

According to a report by theblock, the total locked value (TVL) of Ethena's synthetic stablecoin USDe has dropped from $14.8 billion in October to the current $7.6 billion, a decline of over 50%.

The sharp decline is mainly due to the liquidation of a large number of leveraged loop strategies emerging in DeFi protocols, particularly in lending markets like Aave. Currently, the yield of USDe (around 5.1%) has fallen below the borrowing cost of 5.4% for USDC on AAVE, leading some participants to close their positions.

The report states that despite the decrease in TVL, the usage of USDe is on the rise, with on-chain transaction volume exceeding $50 billion last month, indicating that even as speculative positions are gradually unwound.