Every move of President Trump always influences the nerves of the crypto market. Recently, he announced that Bitcoin, Ethereum, Solana, XRP, and Cardano would be added to the new digital asset strategic reserve list of the United States. This news quickly caused market turbulence, leading to a surge in the market capitalization of these cryptocurrencies. This move not only signifies an important shift in U.S. cryptocurrency policy but also reaffirms Trump's far-reaching influence on the crypto market.
However, Trump's cryptocurrency layout did not start today. As early as around the time he took office, his family and associated institutions had quietly begun deep layouts in the cryptocurrency field through a series of operations. Among them, the governance token ENA of Ethena Labs is particularly noteworthy, becoming one of the key crypto assets of interest to the Trump family after Bitcoin and Ethereum.
However, the keywords frequently discussed about ENA recently are not just the purchase of WLFI, but also its performance in responding to the Bybit hacking incident. Throughout the Bybit hacking incident, Ethena demonstrated top-notch public relations strategies and risk management capabilities. We summarize it in three words: swift, transparent, and professional.
Swift: Respond to the market immediately to stabilize user confidence.
Transparency: Clear information disclosure allows the market to see the real situation.
Professional: Risk control executed accurately, successfully responding to the largest redemption scale in history.
Swift response: Quickly made users aware of the fund safety of USDe before market panic spread, preventing unnecessary runs.
After the incident, Ethena quickly issued a statement confirming that the collateral assets of USDe were not directly stored on Bybit, ensuring the market would not panic sell or run due to rumors. The team further disclosed that the unrealized PnL exposure to Bybit was only $30 million and stated that there were sufficient reserve funds of $60M as a safeguard, ensuring that even if Bybit went bankrupt, it would not affect the stability of USDe. In terms of assets, because of the Off-Exchange Settlement (OES) solution, Ethena can adjust hedging positions directly without going through the exchange's withdrawal channel. Therefore, within minutes, Ethena began moving its hedging positions from Bybit to other exchanges, effectively reducing potential counterparty risk.
Transparent communication: Through clear and continuous information disclosure, allow the market to rationally assess risks and avoid rumors and panic behavior.
After the incident, Ethena frequently updated the progress on Twitter. This level of information transparency is particularly important in extreme market environments, as it can significantly reduce the spread of FUD (fear, uncertainty, doubt). Partner Copper ClearLoop (Ethena's OES custodian) also spoke out, confirming that the settlement process for all ClearLoop users was unaffected, further enhancing market confidence.
Professional risk control: Ensuring that USDe remains stable and does not experience significant discounts under extreme market emotions.
After the outbreak of the Bybit hacking incident, USDe holders began mass redemptions due to market panic. Within a few hours, Ethena processed $120 million in USDe redemptions, marking the largest single-day redemption event since the issuance of USDe, even surpassing the scale of the largest liquidation event two weeks ago.
To ensure smooth redemptions, Ethena quickly adjusted the mint redeem contract.
Increased the stablecoin reserves from $30 million to $250 million to ensure all users can instantly redeem USDe.
An additional $1.8B+ in stablecoin reserves as a backup, further enhancing market confidence.
In the secondary market, the price of USDe briefly showed a discount of less than 50 bps (0.5%), but within an hour it returned to around $1. This stability indicates that the market structure of USDe is relatively robust and its liquidity management is reasonable. The previous brand accumulation gave users strong confidence in Ethena, preventing a sustained wave of selling.
In the aftermath of the hacking incident, Ethena quickly realized its unclosed PnL, optimized its hedging strategy, and minimized its exposure to Bybit, preventing potential exchange default risks.
Completed $30 million in PnL settlement within 90 minutes, ensuring fund safety. After the settlement was completed, Ethena's exposure risk on Bybit was reduced to zero, meaning that even if Bybit faced more severe issues, it would not affect the stability of USDe.
Before the incident, 21% of Ethena's USDe hedging position was on Bybit, totaling $1.2 billion.
After the incident, Ethena quickly reduced its position on Bybit to 15% (approximately $800 million) and transferred most of its positions to Binance.
At different stages of the incident, the Ethena team actively updated the market situation, clarifying and emphasizing the risk management measures that had been pre-planned, such as the custody mechanism of Copper ClearLoop. Ethena's collateral assets remained outside of the exchanges, unaffected by the hacking attack. Moreover, users were informed that Ethena's reserve funds could fully cover the maximum potential loss, ensuring that even if Bybit went bankrupt, the support for USDe would not be threatened, preventing the spread of market panic.
Yes, we used the term 'panic' here; the market that day was indeed in a state of fear. In emergencies, the public often finds itself in a highly tense and uncertain state, and this emotion can quickly spread within the group, leading to emotional amplification. This is the concept of Mass Psychogenic Illness in psychology. In the investment industry, once market uncertainty increases, users can easily be influenced by panic, leading to irrational decisions such as large-scale withdrawals and panic selling. In this incident, the news of the Bybit hack spread rapidly, causing users to become generally tense, and many began to collectively redeem USDe, even though their assets were not directly affected. This collective panic is one of the main reasons for market crashes or severe volatility. Ethena managed this crisis well, using a 'three-step' approach to break the panic cycle.
Step one, respond to the market immediately to prevent the spread of rumors: Clearly inform users that the collateral assets of USDe are safe and not directly exposed to Bybit.
Step two, provide data to support confidence: Use reserve funds and risk control mechanisms as actual data to allow market participants to rationally assess risks, rather than blindly following panic.
Step three, quickly execute liquidity adjustments: Minimize dependence on Bybit and ensure all redemption demands are met, blocking the further spread of panic.
This incident and Ethena's handling results show that Ethena is not only a technically solid DeFi protocol but also commendable in brand management. They value brand reputation and demonstrated robust operational capabilities and public relations strategies during the crisis, setting a good example for the entire crypto industry. Such a team deserves more trust and expectations from the industry. I believe their stablecoin product series and newly launched DEX products will gain a larger market share.
