Synthetic stablecoin USDX depegs below $0.60, PancakeSwap and Lista monitoring the situation

USDX, a synthetic stablecoin issued by Stable Labs, suffered a major depeg on Thursday. The token, which had an all-time circulating supply of $683 million, is trading below $0.60, raising concerns about possible knock-on effects in protocols where it’s integrated. 

Already, Lista DAO, an onchain lending protocol, and PancakeSwap, a Binance-backed decentralized exchange, have issued preliminary statements that they are either monitoring the situation or working to derisk. 

“We are aware and have been closely monitoring the MEVCapital USDT Vault and Re7Labs USD1 Vault, where collateral assets ($sUSDX and $USDX) continue facing abnormally high borrowing rates without repayment activity,” Lista DAO wrote on X. 

“Our team is also aware of the situation involving the affected vaults and is monitoring it closely. Please review and monitor your positions involving these vaults on PancakeSwap. We’ll continue to stay updated and share information as needed,” PancakeSwap wrote. “Stay SAFU.”

USDX is also listed at a trading pair against USDT on centralized exchange BitMart and the Uniswap DEX, among other protocols, according to CoinMarketCap. Staked USDX is currently down to around $0.62, though it initially saw a spike above $1.11, according to The Block’s price page.

Stable Labs does not appear to have commented on the depeg yet.

It calls itself a MiCA-compliant issuer of stablecoins and tokenized assets. USDX issued a press release in 2024 saying it raised $45 million at a $275 million valuation from NGC, BAI Capital, Generative Ventures, and UOB Venture Management, and counts Dragonfly Capital and Jeneration Capital as existing investors.

Possible cause and fallout

USDX uses supposedly delta-neutral hedges on exchanges to maintain its peg. It is unclear what caused the depeg, though it may relate to the $128 million exploit of Balancer on Nov. 3. Forced liquidations of Stable Labs’ hedged BTC/ETH shorts may have caused a spike in redemptions, causing USDX to falter. 

Min, a researcher with digital asset manager Hyperithm, noted that USDX’s “portfolio hasn’t changed in over two months.”

“Are they actually doing any active management? At one point, they even had weird alts like BANANA31 in the portfolio,” Min said. 

Another trader, Arabe ₿luechip on X, alleged that a wallet connected to Flex Yang, founder of Stable Labs and Babel Finance, began posting USDX collateral to swap out alternative stablecoins like USDC, USDT, and Trump-backed USD1 on protocols like Euler, Lista, and Silo earlier this week. 

“It appears that all USDC / USD1 / USDT liquidity was drained by sUSDX / USDX as collateral in Euler / Lista / Silo, paying 100% borrow interest with seemingly no intent to repay,” Arabe ₿luechip wrote. “What’s the rationale for borrowing against USDX while burning 100% interest?”

For its part, Lista has moved to liquidate its USDX/USD1 vault, with assistance from Re7 Labs, which set up the vault. “This action aims to minimize potential losses and maintain healthy market conditions across the ecosystem,” Lista said when announcing the emergency vote.

The protocol executed a flash loan to liquidate over 3.5 million USDX and recover over 2.9 million USD1 tokens.

On Nov. 4, Re7 Labs disclosed some of its vaults had exposure to Stream Finance’s xUSD stablecoin, which lost its $1 peg following an exploit this week.

This story is unfolding and may be updated as The Block learns more.

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