Recent Bitcoin Crash Has Put $1B in sUSDe Loop Trades at Risk, Research Firm Says

Why It Matters

The potential unwind of $1 billion in negative‑carry positions could trigger a cascade of liquidations, eroding liquidity in major DeFi lending platforms and amplifying market volatility across the broader crypto ecosystem.

Summary

A flash crash on October 10 sent Bitcoin tumbling and triggered a sharp drop in DeFi rates, putting roughly $1 billion of leveraged positions that use Ethena's staked USDe (sUSDe) at risk, according to Sentora Research. The popular sUSDe loop trade—where traders repeatedly borrow stablecoins to buy more sUSDe—has turned negative as Aave v3 borrow rates for USDT and USDC now exceed the sUSDe staking yield by about 2.0% and 1.5% respectively. With the carry now negative, looped positions face losses, heightened liquidation risk, and could force deleveraging that strains liquidity on Aave and Pendle. Sentora advises traders to monitor the spread between borrowing APY and sUSDe yield and watch utilization spikes in USDT/USDC lending pools.