At a time when blood flows like a river in the currency circle, another stablecoin "breaks anchor."

In the backdrop of the already turbulent cryptocurrency market, another stablecoin has encountered a trust crisis. The synthetic stablecoin USDX issued by Stable Labs deviated significantly from its peg to 1 US dollar on Thursday, triggering concerns in the market about a chain reaction in the decentralized finance (DeFi) protocols related to it. With the sharp drop in the price of USDX, several mainstream decentralized finance protocols have quickly taken action. Lending protocol Lista DAO and decentralized exchange PancakeSwap supported by Binance have released statements saying they are closely monitoring the situation. Lista DAO has initiated an emergency governance vote seeking authorization to forcefully liquidate the related assets to control the risk exposure. Lista DAO pointed out that the borrowing rates of major borrowers associated with Stable Labs on its platform have surged, but there have been no repayment activities. To address the crisis, the protocol has executed liquidations through flash loans, recovering over 2.9 million USDX tokens, in an attempt to defuse this "time bomb" before the crisis spreads. As of now, the issuer of USDX, Stable Labs, has not made any comments on the matter. According to The Block pricing page, despite briefly soaring above $1.11, the price of USDX had dropped to around $0.113 by the time of writing, with market panic still brewing. Chain Reaction and Emergency Liquidation The USDX anchoring incident has raised high alert in the DeFi community, and related protocols have swiftly initiated emergency plans. On November 6th, Lista DAO launched an emergency governance vote, numbered LIP 022, seeking community authorization for a forced liquidation of the USDX market involving MEV Capital and Re7 Labs managed treasuries. In fact, prior to initiating the vote, Lista DAO had conducted a liquidation of over 3.5 million USDX tokens and recovered over 2.9 million USD1 tokens through a flash loan. The vote was conducted through the Snapshot platform and ended on November 9th. As of writing, all participating veLISTA token holders have voted in favor. Lista DAO stated that this action aims to "minimize potential losses and maintain a healthy market environment for the entire ecosystem." At the same time, decentralized exchange PancakeSwap also issued a reminder to users: "Our team has also noticed the situation involving the affected treasuries and is closely monitoring. Please check and monitor your positions in these treasuries on PancakeSwap." The Wall Street News compiled a timeline of the event on November 6th in UTC time: 9:23 AM: Lista DAO announced that the borrowing rates in the USDT treasury of MEV Capital and the USD1 treasury of Re7 Labs had surged to 800%. The DAO pointed out that the major borrowers (associated with Stables Labs) had not made any repayments, and the collateral assets used were $sUSDX and $USDX. Lista called on the two institutional treasury managers to take responsibility and explain publicly to protect user assets. 10:55 AM: Re7 Labs proposed a solution in the Lista DAO Discord channel, planning to carry out a forced liquidation. Lista DAO stated that they had received the statement and would soon initiate a governance vote to start the liquidation process. 11:08 AM: PancakeSwap stated they were monitoring the events and advised users to check their positions in the relevant pools on PancakeSwap. 11:15 AM: Based on the request from the treasury managers of Re7 Labs, Lista DAO officially initiated an emergency governance vote (LIP-022). The proposal is to adjust the oracle price of USDX to trigger a public liquidation of affected positions based on the outstanding debts. 11:50 AM: MEV Capital acknowledged the abnormally high borrowing rates in their USDT/sUSDX market and took measures, including setting the position limit to 0 and updating the rate model. The involved collateral assets share similar risks with the xUSD collateral assets in the previous Stream Finance $93 million losses. Following: The result of the emergency vote will determine whether Lista DAO executes the oracle price coverage and forced liquidation. The proposal explicitly states that if abnormal liquidity flows are observed in the USDX market during the voting period, the DAO may intervene early, without waiting for the vote to end. Behind the Unpegging: Possible Trigger and Doubts There is still no definitive conclusion in the market about the specific reasons for USDX unpegging, but various speculations have emerged. One possible explanation is that this incident may be related to the theft of $128 million worth of Balancer on November 3rd. This event might have caused the forced liquidation of Bitcoin and Ethereum short positions hedged by Stable Labs, leading to a surge in USDX redemptions, ultimately causing its price to collapse. Meanwhile, on-chain activities have raised more questions. A trader named Arabe luechip on X platform stated that a wallet associated with Stable Labs co-founder Flex Yang and Babel Finance had started borrowing mainstream stablecoins such as USDC and USDT using USDX as collateral in protocols like Euler, Lista, and Silo earlier this week. Arabe luechip wrote: "It seems that all the USDC/USD1/USDT liquidity in Euler, Lista, and Silo protocols has been depleted by using sUSDX/USDX as collateral, with borrowers paying 100% interest but seemingly having no intention to repay." Researcher Min from the digital asset management company Hyperithm also raised doubts. He pointed out that the USDX "portfolio has not changed for over two months" and questioned: "Are they really actively managing it?" Netizens have made various comments on the incident. BitMania on Twitter said, "I was still watching the chart in the early morning, USDX went to zero overnight, all efforts turned into nothing, this is the risk of decentralization." ChainBreaker said, "Smart contracts must not be lazy, this time USDX is a bloody lesson." On Reddit, someone bluntly stated, "Contract upgrades are not child's play, too many people's assets have been destroyed." Someone claimed in a Telegram group, "We have been in touch with three law firms and will launch a joint lawsuit against the project party." Some people helplessly said, "The blockchain dream has been shattered, can USDX promote stricter audits?" Issuer with a Prominent Background, Yet Maintaining Silence Public information shows that the issuer of USDX, Stable Labs, describes itself as a "stablecoin and tokenized asset issuer compliant with EU MiCA regulations." The company announced in 2024 that it had completed a $45 million funding round at a valuation of $275 million. According to the news release at the time, the round was led by NGC, BAI Capital, Generative Ventures, and UOB Venture Management, with existing investors including Dragonfly Capital and Jeneration Capital. However, faced with the severe unpegging crisis of its core product USDX, this company with a notable investment background has yet to make any public response, adding to the market's uncertainty.