DeFi

In a disorderly unwind of USDe, do holders sit in stETH or swap that to USDC/T?

Redemptions are in kind (stETH or other backing assets)

If rates go negative, individual holders must redeem into one of the underlying assets, meaning the risk of holding USDe or using it as collateral is equal to the underlying assets’ price/liquidity risk + custodial risk

Father, garden appreciator, Protocol Specialist @morpho

This means that holders are not obligated to eat a large penalty going from stETH or other LST -> ETH or USD, and it’s not very likely that stETH or other large LSTs suffer a depeg worse than they did before a redemption queue existed at all