DeFi Faces Stability Challenge: USDX Redemption Issues Reveal Underlying Systemic Risks

An influential investor utilized $800,000 in USDT to acquire 933,241 units of Stables Labs'

stablecoin after it lost its $1 peg, plunging to a low of $0.3887 on November 6, 2025, as reported by a . The wallet address 0xe454, recognized as a significant market participant, made the purchase at an average rate of $0.8572 per token, signaling confidence in USDX's ability to regain its peg. Despite this, the investor has been unable to redeem the tokens for cash for more than three hours, prompting doubts about the stablecoin’s reliability and the effectiveness of its redemption mechanism.

This delay in redemption has brought increased attention to USDX’s operational framework, especially since the same investor previously bought 1.4 million USDX during a similar depegging incident just a week prior. Both sets of tokens were submitted for redemption, and if the most recent transaction goes through, it could net a $135,000 gain, according to CryptoTimes. The ongoing delay has led to speculation about possible technical problems, liquidity constraints, or broader protocol stress. While stablecoins are generally designed for immediate redemptions, such extended waits are unusual but can occur during turbulent market periods.

The ongoing instability has overlapped with an urgent governance vote by

, a decentralized autonomous organization overseeing lending protocols, to enforce the liquidation of USDX-related holdings, as outlined in an . The proposal, known as LIP 022, seeks to address exceptionally high borrowing costs—reaching up to 800%—in vaults managed by MEV Capital and Re7 Labs, both associated with Stables Labs. At the time of reporting, 18 veLISTA token holders had supported the measure, which would update USDX’s oracle price to trigger liquidations and help limit further losses. In response, MEV Capital has set allocations to zero in the affected markets and adjusted their interest rate models, while has urged users to keep an eye on their exposure to related liquidity pools.

The USDX

has been compared to the 2025 downfall of Stream Finance’s stablecoin, which dropped to $0.33 after a $93 million loss linked to external fund managers, according to a . Experts caution that cross-collateralized lending models, such as those on and , can heighten risks when synthetic stablecoins lose their peg. The xUSD event exposed $284 million in interconnected DeFi liabilities, revealing vulnerabilities in high-yield environments, as noted in a . DeFi specialist Duo Nine stressed the importance of greater collateral diversity and transparency to avert cascading failures.

With the USDX redemption issue still unresolved and the Lista DAO vote underway, market participants remain anxious. The resolution of this situation could shape how DeFi protocols handle stablecoin disruptions in the future, balancing user safety with overall system stability.