When it comes to a crisis in the crypto industry, the community and its people play a big role in how events turn out. The same goes for the leaders of the industry as well.
The crypto industry saw almost $19 billion wiped off on Friday after exchanges saw severe offloads and the market plummeted drastically. And this time, the Binance team decided to take the high road by protecting users’ funds by paying off from their own pockets.
What happened?
The largest cryptocurrency exchange in the world by volume, Binance, announced that it has paid $283 million to users of three Binance Earn assets after Friday’s volatility caused the assets to depreciate from their original price.
After Friday’s market decline reportedly caused assets in three Binance Earn markets, for Ethena’s stablecoin USDe, Binance-issued Solana liquid staking token BNSOL, and Wrapped Beacon liquid staking token WBETH, to depeg from their intended pricing, Binance management issued an apology to users. On Binance, Ethena’s USDe, which was supposed to be tied to $1, momentarily dropped below $0.66.
Those who had USDE, BNSOL, or WBETH as collateral and were affected, as well as those who had confirmed losses via internal transfers or Earn redemptions, were compensated, according to Binance, for futures, margin, and loan users. The assets did not depreciate as much on other platforms in spite of the problems on Binance.
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What did the Leaders say?
“I do not think it is accurate to describe this as a USDe depeg when a single venue was out of line with the deepest pools of liquidity that experienced no abnormal price deviations whatsoever,” Ethena Labs CEO and co-founder Guy Young wrote on X(Twitter), in response to the incident.
Changpeng Zhao (CZ), the creator and co-founder of Binance, offered social media commentary on BNB’s recent performance. He said that BNB’s pricing is not influenced by market makers, in contrast to many other initiatives.
He also said, “Some people ask why BNB is so strong? While others tried to ignore, hide, shift blame, or attack competitors, the key BNBChain ecosystem players (Binance, Venus, and more) took hundreds of millions out of their own pockets to PROTECT USERS.”
Details from Binance
Binance explained in a different article the adjustments it would make to the impacted markets to protect against future depegs, including establishing a soft price floor in the USDe reference index and adding the asset redemption prices to the index weights to calm future wobbles.
Last but not least, the exchange dealt with dramatic price swings in tokens like IOTX and ATOM, the latter of which allegedly dropped below $0.01 on Binance before rising to its current value of almost $3.50.
What does this mean?
The move from Binance was praised by the community. People called it a fine move from the largest crypto exchange. As Trump’s tariffs hit the market, the industry saw one of its largest liquidations that triggered extreme price falls.
Binance still may have to give out more compensation, but nothing solid has been announced yet.
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