February 21, 2025, is destined to be written into the annals of cryptocurrency history.

In the following 24 hours, the price of Bitcoin plummeted multiple times, briefly falling below $95,000 per coin, and panic spread throughout the market. According to incomplete statistics, over 170,000 investors worldwide were liquidated, suffering heavy losses.

"Money is not in the exchange": The simplest truth

For users in the crypto space, an exchange being hacked is the nightmare they least want to see. Once assets are stored in an exchange, there is a risk of being "taken all at once." However, Ethena's approach is somewhat different; they have adhered to a principle from the very beginning: assets supporting USDe are absolutely not stored in exchanges.

This seems like common sense, but it requires great courage in the pursuit of high returns and a decentralized crypto world. Ethena chooses to have assets custodied by a third-party custodian, Copper, and only connects to exchange liquidity through Copper ClearLoop when trading is necessary. The settlement process is completed internally within the custodian, and funds do not leave the custodian. In simple terms, it's as safe and efficient as "paying with a digital wallet while the money stays in the bank account."

The brilliance of this design lies in the fact that even if something happens to the exchange, the user's core assets will not be directly exposed to risk. This model proved to be very helpful during the Bybit hacking incident. Ethena's supporting assets were completely absent from Bybit, avoiding direct losses. More importantly, it enabled the swift transfer of a $30 million hedge position from Bybit to other platforms, making the entire process feel like "changing defenses on the battlefield"—when the old position fell, the new defense was already in place, showcasing remarkable flexibility. This inevitably leads one to ponder: if more projects could adopt this approach, would there be fewer days of anxiety?

Ethena's configured positions before and after the Bybit attack

$120 million/hour redemption wave: The ultimate test of pressure

Ethena's timeline after the Bybit attack

Panic is contagious.

As Bybit users began to withdraw funds frantically, the stablecoin market also surged.

Data shows that USDe redemption requests exceeded $120 million within an hour, equivalent to 15 times the protocol's daily redemption volume. However, Ethena's response speed was surprising.

Within 10 minutes of the event confirmation, its liquidity buffer expanded urgently from $30 million to $250 million, as if a dam was built in an instant before a flood.

USDe price and redemption situation on that day

This operation was backed by a pre-established emergency mechanism: when market volatility exceeds a threshold, the system automatically triggers liquidity reserve mobilization.

Ultimately, the secondary market price of USDe only briefly deviated from the pegged exchange rate by less than 0.5%, quickly returning to around $1. Meanwhile, other stablecoins generally experienced a discount of 1%-3%.

"It's like when a plane encounters turbulence, and passengers find the oxygen masks automatically drop down."

Transparent communication: Letting users feel secure

There is an unspoken rule in the crypto space: when something goes wrong, project parties either remain silent or speak ambiguously, leaving people guessing for a long time. This time, Ethena took the opposite approach, issuing three announcements within the golden hour after the attack.

1. Confirming zero risk exposure for core assets;

2. Disclosing that the $30 million unrealized profit with Bybit was affected;

3. Providing real-time updates on position migration progress.

They continued to update progress until this portion of risk was eliminated, and even Copper came out to confirm that the settlement was fine.

This transparent approach, though simple, was very effective. When users saw the custodian Copper personally verifying asset safety and on-chain data showing real-time position transfer progress, panic was quickly replaced by rationality. In contrast, Bybit's crisis communication was also handled well; the two sides complemented each other, making the storm seem less frightening. This also leads one to think: previously, it was always believed that information disclosure would expose weaknesses, but now it is realized that sincerity is the greatest moat.

The truth under pressure testing: Design is more important than imagined

This attack revealed a harsh reality: the risk in the crypto world is not "if it will happen," but "when it will happen."

According to DeFiLlama statistics, the amount lost in this Bybit incident is the largest cryptocurrency theft case to date, surpassing the previous hacks of Ronin Network and Poly Network, which lost $624 million and $611 million, respectively.

Top five loss events in cryptocurrency history, data source: Defillama

However, for Ethena, this disaster became an excellent scenario to validate its design philosophy. Decisions that were once questioned as "overly conservative"—such as forgoing custodial earnings within exchanges and pre-setting extreme liquidity plans—suddenly revealed their foresight in a crisis. This reminds us that when choosing projects, in addition to looking at returns, the underlying design may be key.

Postscript: Survival rules in the crypto world

The Bybit incident will eventually pass, but the insights it leaves behind are far more important than the amount lost:

Moving away from exchange custody is not cowardice, but a respect for user assets;

Liquidity buffer pools should not be mere decorations, but the oxygen masks in a crisis;

The cost-effectiveness of transparent communication far exceeds the public relations rhetoric of post-event remedies.

In the crypto world, the best defense is not an impregnable wall, but a design mindset that anticipates storms. When the next black swan arrives, those projects that have donned their "life jackets" in advance may be the true long-termists.