Ethena Labs proposes to use reserve assets to repurchase USDe when secondary market prices are unanchored Odaily Planet Daily News: Ethena Labs recently proposed a new mechanism aimed at supporting orderly liquidity and stability in the market by repurchasing and destroying USDe when the secondary market price is significantly below the anchor value. This proposal is a risk management response to the event where the USDe price briefly and severely unanchored to $0.65 during the extreme market volatility on the Binance exchange on October 10th. Core mechanism repurchase condition: Only activated in the event of "severe market disconnections", with an initial price threshold set for USDe trading at $0.99 or lower. Source of Funds: Repurchase using stablecoins (such as USDT) available in USDe's existing reserves. Funding limit: It is proposed to use 1.2% of the total reserve assets of USDe, which is approximately $95 million based on the current supply of USDe. Operation method: Repurchase will be executed by placing buy orders on the centralized exchange (CEX) order book, using an off chain solution, without directly depositing reserve assets into the exchange. Instant Destruction: The repurchased USDe will be immediately destroyed (Burn). The net impact of the protocol benefit mechanism will be to increase the collateral ratio: purchasing USDe below $1 can capture the price difference, increase the protocol reserve, and thus increase the collateral ratio of USDe. Reduce supply: destroy USDe and reduce its circulating supply. Support price: When the market is under pressure, provide buying support directly in the secondary market to stabilize USDe prices. Dealing with gas fees: Ethena can use the captured price difference to bear the high gas fees, ensuring arbitrage operations can also be carried out during network congestion, which is one of the reasons why market makers were restricted on October 10th. Background review: During the market volatility on October 10th, although Ethena's core casting/redemption function operated normally and processed over $2 billion in immediate redemptions within 24 hours, Binance's lack of direct USDe casting/redemption integration and traders encountering inventory issues on CEX resulted in severe de anchoring of USDe/USDT spot prices on Binance. This proposal aims to proactively intervene in the secondary market, avoid the circular loop of USDe liquidations effect caused by similar events, and bring net benefits to the agreement. The members of the Risk Committee have received this proposal and will provide recommendations in the future. (Ethena Labs Research)