Report: Recent Crypto Market Crash Puts $1 Billion sUSDe Circular Trading at Risk

According to ChainCatcher, citing a report from CoinDesk, Sentora Research stated that after the sharp decline in the crypto market, nearly $1 billion DeFi positions involving Ethena-staked USDe (sUSDe) are at risk.

The plunge has led to a significant drop in DeFi market interest rates, causing leveraged strategies such as sUSDe loop trading to see reduced returns. On Aave v3 Core, the USDT/USDC lending rates are approximately 2% and 1.5% higher than sUSDe yields, respectively. Users leveraging stablecoins to go long on sUSDe are experiencing negative returns, and loop positions buying sUSDe with borrowed stablecoins have started to incur losses. If this situation persists, about $1 billion in positions exposed to negative carry on Aave v3 Core may be liquidated. Negative carry could force collateral sell-offs or deleveraging, weakening liquidity on trading venues and triggering a chain reaction. Sentora reminds traders to pay attention to the interest rate spread between Aave lending APY and sUSDe yields, especially when it remains negative, as well as the utilization rates of USDT and USDC lending pools. Currently, more and more loop positions are approaching liquidation. In the future, traders should watch for surges in USDT and USDC lending pool utilization rates, which may drive up borrowing costs and further increase market pressure when the spread is negative.