As blood flows like a river in the crypto world, yet another stablecoin "depegs."
Against the backdrop of an already volatile cryptocurrency market, another stablecoin has encountered a crisis of trust. The synthetic stablecoin USDX, issued by Stable Labs, severely deviated from its $1 peg on Thursday, sparking concerns over potential ripple effects on related decentralized finance (DeFi) protocols.
As USDX’s price plummeted, several major DeFi protocols quickly took action. Lending protocol Lista DAO and Binance-backed DEX PancakeSwap both released statements saying they are closely monitoring the situation. Lista DAO has launched an emergency governance vote, seeking authorization for forced liquidation of related assets to control risk exposure.
Lista DAO noted that major borrowers connected to Stable Labs saw their borrowing rates soar on the platform, but no repayment activities occurred. To address the crisis, the protocol executed liquidations via flash loans, recovering over 2.9 million USD1 tokens, in an attempt to dismantle this "time bomb" before the crisis escalates.
So far, USDX issuer Stable Labs has not commented on the incident. According to The Block price page, although USDX briefly surged above $1.11, it has since dropped to around $0.113 at the time of writing, and market panic continues to grow.
Chain Reaction & Emergency Liquidation
The USDX depegging event has raised high alert in the DeFi community, with related protocols swiftly launching emergency plans. On November 6, Lista DAO initiated an emergency governance vote numbered LIP 022, seeking community authorization for forced liquidation of USDX markets managed by the MEV Capital and Re7 Labs vaults.
In fact, before launching the vote, Lista DAO had already executed liquidation of over 3.5 million USDX through a flash loan and recovered over 2.9 million USD1 tokens.
The vote is being conducted on the Snapshot platform and will end on November 9. At the time of writing, all veLISTA token holders participating in the vote have supported the proposal. Lista DAO stated this move aims to "minimize potential losses and maintain a healthy market environment for the entire ecosystem."
Meanwhile, decentralized exchange PancakeSwap has also issued a reminder to users:
“Our team is aware of the situation involving the affected vaults and is monitoring closely. Please check and monitor your positions involving these vaults on PancakeSwap.”
Wallstreetcn summarizes the UTC timeline of the incident on November 6:
9:23:
Lista DAO announces it is monitoring the surge in borrowing rates (up to 800%) in MEV Capital's USDT vault and Re7 Labs' USD1 vault. The DAO points out that the main borrower (connected to Stables Labs) has made no repayments and the collateral used is $sUSDX and $USDX. Lista calls on the two institutional vault managers to take responsibility and provide explanations to protect user assets.
10:55:
Re7 Labs responds in Lista DAO’s Discord channel with a plan for forced liquidation. Lista DAO acknowledges the statement and will shortly launch a governance vote to initiate the liquidation process.
11:08:
PancakeSwap says it is monitoring the situation and advises users to check their holdings in the related liquidity pools.
11:15:
At Re7 Labs' vault manager’s request, Lista DAO officially initiates the emergency governance vote (LIP-022). The proposal is to adjust the USDX price oracle so that, based on the size of the unpaid loans, public liquidation of the affected positions can be triggered.
11:50:
MEV Capital acknowledges the abnormally high lending rates in its USDT/sUSDX market and implements countermeasures, including setting position limits to zero and updating the interest rate model. The involved collateral reportedly has similar risk characteristics to the xUSD collateral in the previous $93 million Stream Finance loss incident.
Aftermath:
The result of the emergency vote will determine whether Lista DAO will execute oracle price overrides and forced liquidation. The proposal clearly states: If abnormal USDX market liquidity is discovered during the vote, the DAO may intervene early without waiting for the vote to conclude.
Behind the “Depegging”: Possible Triggers and Doubts
There is no definitive market consensus on the cause of USDX's depegging, but many speculations have surfaced.
One explanation is that this event may be connected to the $128 million Balancer hack on November 3. The incident may have led to Stable Labs’ Bitcoin and Ethereum short positions—used for hedging—being force-closed, resulting in a surge of USDX redemptions and the ultimate collapse of its price.
Meanwhile, on-chain activity has raised further doubts. A trader going by Arabe ₿luechip on the X platform stated, a wallet associated with Stable Labs and Babel Finance founder Flex Yang began this week using USDX as collateral to borrow USDC, USDT, and other leading stablecoins from protocols like Euler, Lista, and Silo. Arabe ₿luechip wrote:
“All USDC/USD1/USDT liquidity in Euler, Lista, and Silo appears to have been drained as sUSDX/USDX was used as collateral. The borrower is paying 100% interest on the loans, but doesn’t seem to intend to repay.”
Min, a researcher at digital asset management firm Hyperithm, also raised concerns. He pointed out that USDX’s “portfolio hasn’t changed in more than two months,” and questioned:
“Are they really managing it actively at all?”
Netizens have commented on the incident. Twitter user BitMania said:
“I was watching the orderbook in the middle of the night—USDX went to zero overnight, all efforts became futile; this is the risk of decentralization.”
ChainBreaker commented:
“You cannot be lazy with smart contracts—USDX is a bloody lesson.”
On Reddit, someone bluntly said, “Contract upgrades are no joke, too many people’s assets got ruined.” Others in Telegram groups claimed, “We’re already in touch with three law firms and will launch a joint lawsuit against the project team.”
There are also resigned comments:
“Blockchain dreams get rug-pulled. Can USDX drive stricter audits?”
Showy Issuer Background, Yet Silence Prevails
Public information shows that USDX’s issuer, Stable Labs, claims to be a “stablecoin and tokenized asset issuer compliant with EU MiCA regulations.” In 2024, the company announced it had completed a $45 million funding round at a valuation of $275 million.
According to the press release at the time, the round was led by NGC, BAI Capital, Generative Ventures, and UOB Venture Management, with existing investors including renowned firms such as Dragonfly Capital and Jeneration Capital. However, faced with a serious depegging crisis of its core product USDX, the company with such a distinguished investment background has so far made no public response, and its silence has further worsened market uncertainty.
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