The algorithmic stablecoin USDe plummeted to $0.65 on October 11, 2025, triggering widespread liquidations and highlighting the vulnerabilities of synthetic stablecoins. The collapse was intensified by a leveraged 'rehypothecation' cycle, where investors repeatedly borrowed and redeposited USDe to achieve returns of up to 50% APY. A significant institutional liquidation on Binance, likely spurred by Trump's announcement of 100% tariffs on Chinese imports, initiated the depeg. As USDe's value fell, leveraged positions were liquidated, further driving the price down in a death spiral reminiscent of the 2022 Luna collapse. The event exposed systemic risks in the broader market, resulting in hundreds of billions in liquidations and substantial losses for market makers and institutional traders.