USDe funds continue to flow out, Ethena TVL halved: Will ENA see a correction in sentiment and valuation?

On October 10th, after the crypto market crash, Ethena became one of the most severely impacted DeFi protocols. Data shows that Ethena’s total value locked (TVL) plummeted from approximately $14.8 billion to $7.4 billion in a short period, a decline of nearly 50%. The core reason for this drop was the large-scale redemption of its yield-bearing stablecoin USDe.

In October alone, USDe redemptions reached $5.7 billion; over the past two months, total outflows amounted to about $8 billion. The market generally believes that during the October crash, USDe experienced a brief decoupling on a certain CEX platform, which intensified liquidation pressures and directly triggered a capital flight.

Compared to other yield stablecoins, USDe’s performance has been notably weaker. Over the past 90 days, USDe has continuously experienced capital outflows, while alternative yield stablecoins like Sky’s sUSDS and Maple’s syrupUSDC have seen significant net inflows. This reflects that after risk events, the market tends to prefer products with simpler structures and lower risk exposure.

At the protocol level, the pressure also transmitted to Ethena’s native token ENA. After the liquidation wave, ENA dropped about 62% from its high in Q4, falling below $0.2, with trading volume shrinking accordingly. Indicators like OBV showed that market sentiment once hit a historic low, indicating severe short-term confidence loss.

However, it is worth noting that ENA’s price level is now close to the stage low in August 2024. Some investors are beginning to see it as a potential rebound target with high volatility and high elasticity. Arthur Hayes recently reduced his ETH holdings and shifted into high-beta DeFi assets, including ENA. On-chain data shows he has purchased approximately 1.22 million ENA tokens.

Additionally, during the sharp decline of ENA, the supply outside exchanges actually increased, indicating some investors chose to buy the dip rather than panic sell. This phenomenon differs from previous cycles characterized by “price drops + concentrated selling pressure.”

Overall, restoring trust in USDe will take time, and Ethena’s TVL is unlikely to quickly rebound to previous highs in the short term. However, ENA has begun to see structural buying interest. Its future trajectory will depend on improvements in yield stablecoin risk management, a rebound in overall market sentiment, and whether DeFi funds will flow back into high-yield sectors.