PANews reported on November 26th that, according to The Block, Ethena's synthetic stablecoin USDe's total value locked (TVL) has fallen from $14.8 billion in October to $7.6 billion currently, a drop of over 50%. Affected by a weak market environment, reduced leverage demand, and compressed perpetual funding fees, the stablecoin's current annualized yield is approximately 5.1%, lower than the double-digit yields at the beginning of the year. Despite the decline in TVL, USDe's usage is on the rise, with on-chain transaction volume exceeding $50 billion last month. The sharp contraction in TVL is largely due to the liquidation of leveraged arbitrage strategies prevalent in DeFi protocols, especially in lending markets like Aave. These arbitrage strategies involve repeatedly depositing pledged USDe (sUSDe) as collateral to borrow USDC at a high loan-to-value ratio, then exchanging it back for sUSDe, and repeating this process to achieve effective leverage of 10x or even higher. This trade could be profitable as long as the annualized yield on USDe exceeded the borrowing cost of USDC; however, with yields declining and currently below the 5.4% cost of borrowing USDC on Aave, some traders have liquidated their arbitrage trades.PANews reported on November 26th that, according to The Block, Ethena's synthetic stablecoin USDe's total value locked (TVL) has fallen from $14.8 billion in October to $7.6 billion currently, a drop of over 50%. Affected by a weak market environment, reduced leverage demand, and compressed perpetual funding fees, the stablecoin's current annualized yield is approximately 5.1%, lower than the double-digit yields at the beginning of the year. Despite the decline in TVL, USDe's usage is on the rise, with on-chain transaction volume exceeding $50 billion last month. The sharp contraction in TVL is largely due to the liquidation of leveraged arbitrage strategies prevalent in DeFi protocols, especially in lending markets like Aave. These arbitrage strategies involve repeatedly depositing pledged USDe (sUSDe) as collateral to borrow USDC at a high loan-to-value ratio, then exchanging it back for sUSDe, and repeating this process to achieve effective leverage of 10x or even higher. This trade could be profitable as long as the annualized yield on USDe exceeded the borrowing cost of USDC; however, with yields declining and currently below the 5.4% cost of borrowing USDC on Aave, some traders have liquidated their arbitrage trades.