Ethena Puts USDe’s Unrealized Binance Exposure at $8.8 Million

Ethena Labs put USDe’s unrealized profit-and-loss exposure to Binance at about $8.8 million, a figure it compared with an excess reserve fund above $60 million as it described how collateral tied to exchange positions is held.

Ethena made the disclosure Oct. 29 but did not give a measurement time or explain how it calculated the exposure. It described unrealized exposure, not a confirmed loss. The protocol said collateral associated with exchange positions is held with off-exchange custodians.

Binance said Oct. 30 that a security incident had an estimated impact of about $6.3 billion, that roughly $3 billion had been frozen on-chain and that it would cover losses with its Secure Asset Fund for Users and company funds.

Ethena’s July-September update put its hedged Bitcoin (BTC) and Ether (ETH) positions at $840 million, or 17% of backing, as of Sept. 30. Binance was the largest hedging venue in the update’s venue mix, at 12% of total backing. That allocation measure does not show that the assets were held in Binance wallets, and it is separate from the $8.8 million exposure figure.

Two Oct. 30 reserve calculations showed different results. A snapshot at 12:08 a.m. ET (04:08 UTC) showed USDe supply of $4.53088 billion and backing assets of $4.53114 billion before the Reserve Fund, a difference of $260,000. With the fund included, backing was $4.59312 billion, or $62.24 million above supply and 101.37% of supply. A separate calculation at 6:59 a.m. ET (10:59 UTC) showed a $28.12 million surplus and a 100.62% collateralization ratio. The later result used its own reserve and liability figures; the two calculations were not reconciled.

Ethena said Chainlink and LlamaRisk had confirmed that USDe was more than 101% collateralized. Ethena did not say whether that figure included the Reserve Fund, and the basis of its claim remains unresolved.

Ethena’s off-exchange custody arrangements are designed to keep collateral outside exchange custody while allowing it to support trading. Its documentation also describes risks to unsettled profit and loss during an exchange failure, when settlement may depend on cooperation from the exchange and custody providers.