USDX de-pegs and crashes to $0.54! PancakeSwap and Lista urgently liquidate $680 million.

The synthetic stablecoin USDX issued by Stable Labs has experienced a significant depeg, with its historical circulating supply reaching as high as $683 million. Currently, its trading price has once dipped below $0.54, sparking concerns about potential chain reactions within its integrated protocols. On-chain lending protocol Lista DAO and Binance-supported decentralized exchange PancakeSwap have urgently liquidated $680 million.

Complete Timeline of USDX Depeg Event

USDX, a synthetic stablecoin issued by Stable Labs, saw its price drop to $0.79 on November 7, and overnight, it briefly touched a low of $0.54. Its historical circulating supply once peaked at $683 million. At present, the trading price has fallen below $0.60. According to The Block’s price page, staked USDX is roughly valued at $0.62, after initially soaring above $1.11. This extreme volatility indicates a high level of market panic.

Data from CoinMarketCap shows USDX is traded against USDT on multiple platforms, including centralized exchange BitMart and the Uniswap DEX. The depeg event on Thursday triggered panic selling among investors, with trading volume surging but buy-side demand severely lacking, causing prices to continue declining. For a stablecoin claiming a 1:1 peg with the US dollar, dropping to $0.60 implies a 40% loss in value for holders—catastrophic for confidence.

The depeg may be linked to the $128 million attack on Balancer on November 3. Balancer is a key automated market maker protocol on Ethereum, and the attack resulted in losses across several liquidity pools. If Stable Labs had hedged positions on Balancer, the attack could have forced liquidations of these positions, disrupting USDX’s delta-neutral strategy.

Additionally, the depeg is associated with the collapse of Stream Finance. On November 4, Stream Finance suspended withdrawals after an external fund manager disclosed losses of $93 million. Re7 Labs revealed that it holds some of its treasury in Stream Finance’s xUSD stablecoin, which lost its peg after a vulnerability exploit this week. Due to the complex interdependencies within the stablecoin ecosystem, the depeg of one asset often triggers a chain reaction affecting others.

Urgent Warnings and Liquidation Actions by Lista DAO and PancakeSwap

On-chain lending protocol Lista DAO and Binance-supported decentralized exchange PancakeSwap have issued preliminary statements, indicating they are closely monitoring the situation and working to mitigate risks. Lista DAO tweeted: “We have identified MEVCapital’s USDT treasury and Re7 Labs’ USD1 treasury, and are closely watching these vaults, where collateral assets ($sUSDX and $USDX) continue to face abnormally high borrowing rates, with no repayment activity.”

Unusually high borrowing rates are a clear sign of market stress. When a asset’s lending rate spikes to 100% or more, it indicates extreme demand shortages or severe liquidity crises among borrowers. Lista DAO noted “no repayment activity,” suggesting borrowers may be unable or unwilling to settle their debts—an early sign of default.

PancakeSwap stated: “Our team is aware of the affected vaults and is monitoring the situation. Please review and monitor your holdings related to these vaults on PancakeSwap. We will continue to update and share relevant information as needed. Stay safe.” As a Binance-supported DEX with a large user base and liquidity on BNB Chain, PancakeSwap’s warning carries significant market implications.

Lista DAO has begun liquidating its USDX/USD1 vaults with assistance from Re7 Labs, which set up these vaults. In an emergency vote, Lista said: “This move aims to minimize potential losses and maintain a healthy market environment for the entire ecosystem.” Emergency voting is a common DeFi protocol mechanism to enable rapid community decision-making during crises.

The protocol executed a flash loan to liquidate over 3.5 million USDX tokens and recovered more than 2.9 million USD1 tokens. Flash loans, a DeFi innovation, allow users to borrow large sums, execute operations, and repay within a single transaction—done in seconds. Using a flash loan for liquidation demonstrates the technical expertise and swift response of the team.

Failure of Delta-Neutral Strategies and Risks in Synthetic Stablecoins

USDX employs a so-called delta-neutral hedging strategy provided by exchanges to maintain its peg. Delta-neutral strategies involve holding both long and short positions to hedge against price fluctuations—for example, holding BTC and ETH spot while shorting equivalent amounts on perpetual markets to earn funding rates.

However, such strategies are vulnerable under extreme market conditions. Sharp volatility can cause short-term deviations between spot and futures prices, breaking the hedge. Additionally, technical failures or forced liquidations on exchanges can trigger unwarranted liquidations of hedge positions, leading to significant losses.

Min, a researcher at digital asset management firm Hyperithm, pointed out that USDX’s “portfolio has not changed in over two months.” He questioned, “Are they actively managing it? They even added some strange alternative investments like BANANA31 to the portfolio at one point.” This raises concerns about potential risk management flaws within Stable Labs.

Inherent Risks of Synthetic Stablecoins

• Strategy Risks: Delta-neutral hedging can fail during extreme market swings
• Liquidity Risks: Hedge positions may be forcibly liquidated at unfavorable prices
• Concentration Risks: Over-reliance on a single exchange or protocol
• Management Risks: Lack of active management and risk adjustment

Suspected Manipulation and Abnormal 100% Borrowing Rates

Another trader, Arabe ₿luechip, claimed that wallets associated with Stable Labs and Babel Finance founder Flex Yang started deploying USDX collateral earlier this week to exchange USDC, USDT, and Trump-backed USD1 on protocols like Euler, Lista, and Silo.

“Looks like all USDC / USD1 / USDT liquidity has been drained by sUSDX / USDX, which are used as collateral on Euler / Lista / Silo, paying 100% interest on loans—without any intention of repayment,” Arabe ₿luechip wrote. “Borrowing against USDX and paying 100% interest—what’s the logic behind this?”

This suspicion hits at the core of the event. Rational borrowers would never agree to pay such exorbitant annualized interest, as it would require generating over 100% returns to profit—impossible in any market. The only plausible explanation is that borrowers intend not to repay, instead using USDX as collateral to borrow valuable stablecoins like USDC and USDT, then abandon repayment.

If true, this could constitute market manipulation or fraud. It exploits the automation and rapid response limits of DeFi protocols, extracting maximum value before the system recognizes the issue. Lista DAO’s emergency liquidation was likely an effort to prevent further deterioration.

Stable Labs has yet to respond publicly. The company announced in 2024 that it raised $45 million from firms including NGC, BAI Capital, Generative Ventures, and UOB Venture Management, valuing it at $275 million. Investors like Dragonfly Capital and Jeneration Capital are also involved. These top-tier backers once lent credibility to USDX, but that trust appears to be rapidly eroding.