Bitcoin collapse that hit the cryptocurrency market on October 10-11 
$114,239.93 And altcoinWhile it caused sharp losses in value in the ‘s, it also shook the investment strategies targeting Ethena’s staked USDe (sUSDe) positions. research company Centaur ResearchAccording to the report published by , approximately $1 billion of positions secured by sUSD in DeFi protocols are at risk as return rates turn negative.
Negative Return Cycle Begins in sUSDe
Ethena‘s sUSDe offered investors a positive return advantage as a derivative asset that earned returns by staking the USDe token. However, after the sharp market decline on October 10-11, interest rates in DeFi markets dropped and this advantage was reversed. Sentora Research reported that USDT and USDC borrowing rates on Aave v3 Core exceeded the sUSDe yield by 2 percent and 1.5 percent, respectively. This difference is leveraged in sUSD caused their strategies to lose their appeal.
Investors Aave And pendle In protocols such as using sUSDe as collateral, borrowing USDT or USDC and purchasing sUSDe again. This cycle provided significant profits in periods when borrowing costs were low and staking returns were high. But the negative return difference made this mechanism harmful. According to the company’s report, if negative returns continue, approximately $1 billion of leveraged positions may be at risk of liquidation.
Liquidity Pressure and Possible Chain Effects
Sentora Research pointed out that if the negative return continues for a long time, collateral sales and position reductions may increase in DeFi protocols. This scenario is both in sUSD It may weaken the liquidity of both the collateral and the borrowed stablecoins in the market. High borrowing rates, especially on Aave v3 Core, can trigger chain liquidations.
The research firm emphasized that investors should closely monitor the difference between Aave’s borrowing annual rate of return (APY) and the sUSDe yield. Moreover USDT And USDC He stated that sudden increases in usage rates in pools could deepen the pressure by increasing borrowing costs. According to Sentora Research, there are many positions that are only 5 percent away from liquidation, and even a small market fluctuation could lead to the liquidation of these positions.
