The depeg of USD has triggered a 20 billion liquidation wave, and a 72-hour compensation plan has been released!

The USDe depeg event shocked the market, with major exchanges announcing full compensation for affected users within 72 hours. During the USDe depeg, the prices of altcoins such as ATOM and IOTX briefly fell to zero, triggering the largest $20 billion liquidation event in crypto history. The exchange announcement revealed the USDe depeg compensation mechanism, promising to compensate based on the difference between market price and liquidation price.

USDe depeg event compensation announcement: Automatically issued within 72 hours

On October 12, a large centralized exchange released an announcement regarding the depeg event handling and risk control optimization for USDE, BNSOL, and WBETH, stating that a comprehensive review of the USDe depeg incident has been completed. The platform promises to compensate all affected contract, leverage, and borrowing users within 72 hours, and the funds will be automatically disbursed to the relevant accounts.

· USDe depeg compensation target and calculation method

The compensation scope for the USDe depeg event covers all users holding USDE, BNSOL, and WBETH as collateral, especially traders affected by the USDe depeg from 05:36 to 06:16 (UTC+8) on October 11, 2025.

USD depeg compensation calculation standard:

Compensation reference time: October 11, 2025, 08:00 (UTC+8)

Calculation method: The difference between the market price and the liquidation price.

Benefited users: contract, leverage, and borrowing coin users

Distribution method: automatic crediting, no application required

The exchange stated that the compensation for the USDe depeg event will be calculated based on the difference between the market fair price of USDe at 08:00 on October 11 and the actual liquidation price. This means that if a user is liquidated at $0.65 due to the USDe depeg, but the market fair price is $0.95, the platform will compensate the $0.30 difference.

· USDe depeg triggers a chain reaction: The mystery of altcoin prices going to zero

The USDe depeg event is not an isolated phenomenon. During the cryptocurrency market crash on Friday, altcoins including Cosmos's ATOM, IoTeX's IOTX, and Enjin's ENJ saw their prices on that platform drop to near zero. However, these tokens maintained their true market value on other centralized exchanges. Why is the USDe depeg issue particularly severe on that platform?

Comparison of altcoin prices during the USD depeg period

(Source: Trading View)

Price differences between the platform and other exchanges:

ATOM: The platform briefly fell to zero, while other exchanges fell by 53%.

IOTX: The platform briefly fell to zero, while other exchanges fell by 46%.

ENJ: The platform briefly fell to zero, while other exchanges fell by 64.5%.

The USDe depeg event occurred on October 10, causing the cryptocurrency market to experience its most severe fall since the FTX collapse, with a total market value shrinking by about $850 billion within a few hours. Bitcoin dropped from a near $124,000 high to a $105,000 low, a decline of about 10-15%. However, alts performed even worse, especially tokens traded on platforms affected by the USDe depeg.

· Why does the USDe depeg lead to alts going to zero?

The technical reasons behind the depeg of USDe leading to the zeroing of alts are related to the unified collateral system of the platform. When the depeg of USDe causes the price to fall, many leveraged traders face margin shortfall issues. The platform automatically liquidates the alts used as collateral to cover losses, resulting in greater selling pressure and accelerating the price decline.

The chain reaction triggered by USD depeg:

USDe depeg triggers margin alert: USDe price falls from 1 USD to 0.65 USD, margin ratio of users holding USDe as collateral decreases.

Automatic liquidation mechanism activated: the system automatically sells off altcoin collateral, and the USDe depeg issue spreads to other tokens.

Market makers withdraw funds: Due to platform technical delays, market makers withdraw funds, resulting in a sudden drop in liquidity.

Order book vacuum: During the USD depeg period, there are temporarily no buy orders, and the system shows certain token prices as "zero".

Legendary trader Arthur Hayes pointed out that major exchanges are "liquidating collateral related to cross-margin positions," which has intensified the selling pressure during the depeg of USDe.

USDe depeg liquidation scale: 20 billion USD epic disaster

The USDe depeg event is part of a larger market crash. During the plummet from October 9 to 10, nearly $20 billion worth of encryption positions were liquidated, approximately 20 times that of the market crash during the COVID-19 pandemic in 2020. Over 1.6 million traders lost positions due to leverage, with the USDe depeg playing a key role in this.

USDe depeg settlement event data:

Total liquidation amount: 20 billion USD

Affected traders: Over 1.6 million

Compared to history: The 20-fold drop during the pandemic in 2020

Market cap evaporation: Total market cap shrinks by 850 billion USD

Many traders use the platform's leverage (borrowed money) to increase profits. When USDe depegs and triggers a price fall, the leverage effect amplifies the losses. The platform's unified collateral system allows users to use assets like USDe, BNSOL, and WBETH as collateral, and the depeg of USDe directly affects these users' margin ratios.

· The platform's technical issues exposed by USDe depeg

During the depeg period of USDe, the platform's trading system became overloaded. Some users reported account freezes, stop losses not being executed, and trading delays. These technical issues exacerbated the negative impact of the USDe depeg, preventing users from taking timely protective measures.

Market analysts have indicated that due to these delays, market makers are withdrawing funds from the platform. This means that during the USDe depeg period, there are temporarily no buy orders, causing the system to display certain token prices as "zero," even though these tokens still hold value on other exchanges.

USDe depeg historical review: The 2017 Ethereum flash crash revelation

The USDe depeg incident is not the first in history. A similar "flash crash" occurred in 2017, when the price of Ethereum on GDAX briefly fell to $0.10 due to a flood of automated sell orders that led to a liquidity crisis.

This USDe depeg event has similarities with the flash crash in 2017:

1. Occurs during extreme market fluctuations

2. The automatic liquidation mechanism amplifies the sell-off pressure.

3. Insufficient liquidity leads to price anomalies.

4. Only affects specific platforms, other exchanges are normal.

However, the USDe depeg event was on a larger scale, affecting multiple tokens such as USDE, BNSOL, and WBETH, with a liquidation amount reaching 20 billion USD, far exceeding any previous single event.

USDe depeg follow-up: Platform executives apologize and commit to reforms

After the USDe depeg incident, the platform's executives issued an apology statement. The Chief Customer Service Officer stated that "some users encountered issues during trading" amid extreme volatility and a surge in platform traffic. The CEO also apologized, saying, "I deeply apologize to everyone affected. We will not make excuses - we will listen carefully, learn from this, and commit to doing better."

· USDe depeg compensation policy details

The platform clearly states that it will compensate users for verifiable losses directly caused by platform or system failures. However, the USDe depeg compensation policy also sets limitations: losses due to price fluctuations or unrealized gains will not be compensated.

USD depeg compensation scope definition:

Compensation: Direct losses caused by platform technical failures.

Compensation: The difference between the settlement price and the market price during the USD depeg period.

No compensation: losses caused by normal market fluctuations

No compensation: unrealized gains or opportunity costs

The market is calling for an investigation into the $20 billion liquidation event, emphasizing the need to review the system performance and risk management mechanisms of exchanges during the depeg period of USDe.