As market skepticism towards vault curator and the transparency of on-chain and off-chain strategies spreads, the supply of the leading delta-neutral stablecoin project Ethena USDe has fallen from over 14B to over 9B USD in a single month. In fact, Ethena should be viewed as a large-scale basis trading hedge fund managing several billion USD rather than merely a stablecoin. By depositing your collateral, you are essentially trusting the project party's neutral strategy, but at least the flow of funds for USDe is relatively transparent, with publicly available backing + proof of reserves.

The current dilemma in the market is caused by multiple factors, affecting not just one project party but the overall ecosystem:
(1) There is a lack of trust in the risk control of the strategy curator, and currently, several leading curators have not released public statements regarding the xUSD incident. To some extent, curators play the role of banks in traditional markets, where LPs entrust their money to them, indirectly meaning: the curator executes more complex and profitable strategies for me, which I might not be able to do myself, but when something goes wrong, there is no standardized protection.
(2) Doubts about the on-chain stablecoin project: Only 30% of the 500M TVL of xUSD is trackable by @DeBankDeFi, and it was later discovered that Stream involved off-chain trading strategies, leading to a claimed loss of 100 million USD.
(3) @quant_sheep mentioned the issue of hard coding in the on-chain lending protocol, where the oracle price of xUSD is hard-coded to be greater than 1 USD. Therefore, when xUSD crashes, it ignores the price fluctuations in the secondary market. The hard-coded price prevents the liquidation that should protect USDC lenders. Since the protocol still considers the value of xUSD to be 1 USD or above, anyone providing USDC to these liquidity pools will end up with bad debt, that is, worthless xUSD.

Playing DeFi mining for dozens of % annualized returns is no longer a simple measure of profit and loss ratio, but rather, even if a project party has gone through multiple audits and security assessments, there can still be incidents that lead to a total loss of principal, and users' trust levels will only decline silently. Friends from outside the circle told Xinjiang that it is particularly awkward to enter the circle now:
1: You have 1000U, buy a share of Q, at most you will lose money, it may break even after a few years.
2: You have 1000 USD, put it into DeFi mining, with an annualized return of 15%, there is no guarantee against hacking, the principal may become zero.

Has the dark time of DeFi arrived🥲? It is estimated that many people will be hesitant to invest in DeFi for the next few months or a year.