USDE Crash: Unveiling Shocking Details of Binance’s Oracle Vulnerability

The **USDE crash** on October 10 sent shockwaves through the crypto market. This unprecedented event triggered the largest **crypto liquidation event** in history. Over $19 billion was liquidated, according to CoinGlass data. This caused a $65 billion decline in open interest. Such figures dwarf previous crashes. For instance, the COVID-19 crash saw $1.2 billion. The FTX collapse recorded $1.6 billion in liquidations. Crypto News Insights Research obtained exclusive data. We analyze the specifics of this market meltdown here.

Binance Oracle Vulnerability Uncovered

Consensus among investigators points to a key factor. Vulnerable pricing oracles on the Binance exchange played a significant role. Specifically, three pegged crypto tokens were affected. These included **USDE**, bnSOL, and wBETH. Their collateral value was determined using Binance’s internal orderbook data. External oracles were not used. This exposed users of “Unified Accounts” to liquidation risks. This risk heightened during market irregularities. Evidence suggests a potential coordinated attack on October 10. However, findings remain inconclusive.

USDE significantly contributed to the cascading liquidations. It accounted for approximately $346 million in volume. This compares to wBETH ($169M) and bnSOL ($77M). The mass withdrawal of buy-side liquidity for a stablecoin pair raises suspicion. There were no concerns about USDE’s collateral soundness. This differed from previous UST and USDC depegs. Mints and redemptions of USDE operated normally. Yet, professional market makers withdrew liquidity en masse. Automated risk-scoring systems initiated defensive quote withdrawals. This limited their exposure.

The USDE Crash: Understanding the Stablecoin Depeg

Crypto News Insights Research uses exclusive, granular data. Our partners at Rena Labs provided this information. Rena Labs is an AI-driven market analytics firm. We dissect the unusual activity on the **USDE**/USDT trading pair. Rena’s anomaly detection engine recorded a sharp market dislocation. This was one of the most complex ever seen in **stablecoin depeg** trading. This is surprising given the lack of collateral concerns. Before the collapse, USDE’s average total liquidity stood at $89 million. It had a balanced structure of buy and sell orders.

Between 21:40 and 21:55 UTC, liquidity on Binance collapsed by nearly 74%. It fell to roughly $23 million. By 21:54, market depth almost vanished. Total liquidity dropped to a mere $2 million. Market-making activity effectively ceased. Bid-ask spreads surged to 22%. The market lost its structural integrity. Trading volume increased 896 times. Ask-side depth simultaneously collapsed by 99%. This imbalance pushed USDE’s price down to $0.68 on Binance’s spot market. It remained near its peg on other exchanges.

Exclusive Orderbook Data Analysis Reveals Collapse

During the 10-minute crisis, trade intensity surged. It increased nearly 16 times. The normal rate was 108 trades per minute. It peaked at almost 3000 trades per minute. A staggering 92% of these were sell orders. Many orders stemmed from panic selling. Stop-loss triggers and forced liquidations also contributed. Rena’s anomaly engine detected abnormal activity earlier. At 21:00 UTC, it reported 28 anomalies. This rate was four times higher than the previous hour. Anomalies included unusual spikes in volume, prices, or trade intensity. Suspicious patterns, bursts, clusters, and trade sequences were also noted. This comprehensive **orderbook data analysis** provides critical insights.

Anomalies Precede the Crypto Liquidation Event

Furthermore, fingerprinting activity, characteristic of order spoofing, was identified. Three distinct volleys of large orders appeared before the crisis. These orders were placed as BTC declined on major exchanges. This occurred before USDE faced its liquidity crunch. This event highlights the market’s fragility. Significant leverage remains in the crypto ecosystem. Cascading liquidations can wipe out seemingly safe trades. The **USDE depeg** demonstrates limited organic demand for many tokens. Orderbooks for many crypto assets show little resilience. This is especially true without large market makers like Wintermute.

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