The synthetic stablecoin USDX has sharply depegged from its intended $1 value, briefly dropping below $0.4 earlier today. The price partially recovered to as high as $0.85, but has since fallen again and is now fluctuating near $0.63.
The token, issued by Stable Labs, was designed to maintain its peg using delta-neutral hedging strategies. However, the recent drop in price has raised concerns among users and lending protocols where USDX and its staked version, sUSDX, are used as collateral.
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High Borrowing Rates and Stalled Repayments
ListaDAO and PancakeSwap, two major protocols involved in lending operations that include USDX, have issued public statements confirming they are monitoring vaults tied to MEV Capital and Re7 Labs. These vaults contain USDT and USD1 stablecoins, but use USDX and sUSDX as collateral. ListaDAO noted “abnormally high borrowing rates without repayment activity” and called on both MEV Capital and Re7 Labs to take immediate action.
In response, MEV Capital reported that they have set the allocation cap to zero for the affected vaults and updated the interest rate model to reduce borrowing incentives. ListaDAO has initiated a liquidation process for the USDX/USD1 market, which includes an emergency vote and adjustments to oracle parameters through governance.
Read also: What the GENIUS Act Means for Stablecoin Regulation
Redemption Delays and Market Volatility
On-chain activity shows that some users attempted to arbitrage the depeg. One address spent $800,000 USDT to purchase approximately 933,000 USDX at a discount of $0.8572, adding to a previous 1.4 million USDX purchase. The wallet attempted to redeem the tokens, but several hours later had not succeeded, raising questions about the current status of the redemption process.
USDX continues to be listed on several decentralized and centralized exchanges, including Uniswap and BitMart. As of the latest data, the price remains volatile and has not returned to its target $1 level.
Read also: The Collapse of LUNA and TerraUSD (UST) – How Did It Happen?
Ongoing Monitoring
The situation remains active. Both ListaDAO and MEV Capital have stated they continue to monitor vault performance and liquidation processes. Meanwhile, protocols with exposure to USDX, such as Re7 Labs, are working to mitigate potential risks and protect users.
USDX’s ability to recover its peg will likely depend on further updates from the issuer, successful completion of liquidation processes, and resolution of the underlying borrowing issues in the affected vaults.
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