USDe vs LUNA: Why One Coin Bounced Back While the Other Went to Zero

October 2025 just gave us the ultimate stress test for crypto stablecoins. When BTC crashed from $117k to $105.9k and ETH dumped 16% in a single day, USDe briefly tanked to $0.65 (down 34% from the $1 peg) but climbed back to $0.98 within hours. Compare that to LUNA-UST in 2022, which simply… evaporated.

Why the difference? The answer lies in what’s actually backing these coins.

The Critical Difference: Real Assets vs. Hope

USDe’s Stack:

• Real, redeemable collateral (60%+ BTC and ETH)
• Hedging through derivatives markets (not corporate promises)
• Collateral ratio stayed above 120% even during the crash
• Users could actually redeem assets 24/7, no questions asked
• When liquidations hit $19.36B across the market, Ethena’s short positions generated $120M in floating profit that helped stabilize things

LUNA-UST’s Stack:

• No real asset backing—just the expectation that LUNA would go up
• When panic started, the only way to prop up UST was by printing more LUNA
• More LUNA = hyperinflation = everyone loses
• Total collapse inevitable

In economics terms: USDe is backed by wealth, UST was backed by sentiment.

What Actually Happened During the Crash

The liquidation cascade was brutal—1.66M traders got liquidated in a day. USDe’s liquidity pool on Uniswap shrank 89% (down to just $3.2M), meaning a 100K USDe sell order hit a 25% slippage and went for $0.62 instead of $0.70.

But here’s the key: Ethena didn’t need to bail anyone out. They just posted proof that collateral was still there, adjusted their risk parameters (cut liquid staking derivatives from 25% to 15%, limited leverage), and let the market do its thing. Users saw the numbers, trusted the mechanism, and bought back in.

It’s basically what economist Hayek predicted in 1976—in a competitive money market, issuers have every incentive to maintain stability or they lose users to competitors. No government needed.

The Catch: USDe Ain’t Perfect Either

But real talk—the October test exposed some rough edges:

1. Crypto-Only Collateral Risk With 80%+ of collateral tied to BTC/ETH, USDe is basically betting on the entire crypto market moving in sync. When everything dumps together, even the hedging lags. Liquid staking derivatives (WBETH, BNSOL) don’t actually diversify—they’re just leveraged plays on Ethereum.

2. Hedging Concentration ~70% of shorts are on just two centralized exchanges. One exchange paused perpetual contracts during the crash and—boom—hedging gap. Plus, USDe only uses perpetual futures for hedging; no options, no futures, no multi-leg strategies.

3. The Real Economy Problem Unlike fiat backed by tax revenue and productive economy, USDe’s collateral value is tied entirely to crypto market sentiment. It’s more resilient than LUNA, but it’s not the same as gold or government bonds.

The Upgrade Path: RWA Integration

This is where it gets interesting. Ethena’s moving to add RWA (real-world assets) like gold tokens, US stock tokens, and government bonds. Why? Because:

• Cross-market stabilization: Gold price correlation with ETH is only 0.2—opposite movements create a buffer
• Real economic value: Stock tokens = actual company earnings; bond tokens = sovereign tax capacity; gold = millennium-proven store of value
• Diverse hedging options: Instead of just crypto perpetuals, you can hedge through traditional financial markets

The target: bring crypto collateral down from 80% to 40-50%, while keeping the liquidity advantages of the crypto side.

What This Means for You

USDe passed the October 2025 crash test because it has real collateral and real redemption mechanisms—not because it’s perfect. The contrast with LUNA shows that backing matters. A stablecoin with nothing behind it will eventually go to zero when sentiment flips.

But USDe also shows that a stablecoin can withstand extreme volatility if the mechanism is transparent, the collateral is diverse, and users can always exit. That’s the innovation.

The RWA upgrade is the natural next step—not a pivot, but a maturation. When it’s done, USDe moves from ‘interesting experiment’ to ‘actually functional non-state currency.’ And that’s when things get really interesting for the whole space.

The lesson from Hayek that crypto keeps learning: competition forces you to not suck. LUNA sucked. USDe didn’t. That’s the difference between zero and recovery.