Ethena's USDe stablecoin experienced a significant 40% reduction in its circulating supply throughout October, as reported by BitcoinWorld. This decline is attributed to falling perpetual futures funding rates and diminished yields, which have sparked concerns over the stability of algorithmic stablecoins during volatile market conditions. Analysts highlight that the reduced yields have deterred new deposits and encouraged current holders to move their assets in search of better returns, contributing to the contraction of USDe's supply. This development underscores the challenges faced by algorithmic stablecoins in maintaining stability and attracting investment during market downturns.