DeFi News: sUSDe Loop Trades Worth $1B at Risk

Following the October 10 market crash, nearly $1 billion in DeFi positions utilizing Ethena's staked USDe (sUSDe) are now at risk, according to Sentora Research. The popular sUSDe loop trade strategy involves depositing sUSDe as collateral to borrow stablecoins (like USDT or USDC), which are then used to buy more sUSDe, amplifying yield. However, the crash caused DeFi funding rates to drop significantly, flipping the yield differential negative, meaning borrowing costs now exceed sUSDe staking rewards. This negative carry forces looped positions to incur losses, potentially triggering the unwinding of the $1 billion in exposed positions on platforms like Aave v3 Core. Sentora advises traders to monitor the spread between Aave's borrow APY and the sUSDe yield, as sustained negative spread could lead to collateral sales, deleveraging, and cascading market effects.

(Source：CoinDesk)