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Rough last 24hrs for everyone involved. Firstly want to call out the response from @benbybit and the team. Don't think I've ever seen a team handle crisis communications as well as they did. Stood up to face the music immediately to provide transparent answers to the community. An example for us all to look up to. Ethena handled the largest single day of redemptions and unwound all unrealised exposure to Bybit within an hour of the news breaking. In any event, the unrealised exposure at its peak was always a fraction of the excess reserves behind USDe. At no point was USDe undercollateralised despite Bybit representing >20% of the hedging exposure as the second largest derivative exchange in the world. Even if the unrealised exposure to Bybit had not been reduced to zero within the hour, this exposure could have been lost entirely and USDe would have still been overcollateralised. We hope this event validates some of the design decisions that were made to reduce risk for our users using OES custody solutions. The easy design route was to avoid the costs and the added engineering complexity of custodians within our offchain hedging systems. But we don't make decisions because they are easy, we make decisions we think are right for our users in the long run. It is not good enough to listen to me speak about how we mitigate for these risks in theory, often you need to see it play out in real time with your own eyes to have confidence it actually works at scale. While in the short term this has been painful for many parties involved, I hope we have continued to build confidence and trust from our users on the go forward resilience of the model even in the face of extreme pressure. An event like this was often cited as the single biggest risk to USDe, and we have experienced zero loss to the backing or issues with regards to redemption requests. We are in the process of providing a full write-up on the event to help answer any open questions which we will share via the @ethena account shortly.

gdog97_ ↗