Amid ongoing turbulence in the cryptocurrency market, another stablecoin has faced a crisis of confidence. USDX, a synthetic stablecoin issued by Stable Labs, deviated sharply from its $1 peg on Thursday, sparking concerns about potential ripple effects across decentralized finance (DeFi) protocols.

As USDX prices plummeted, several major DeFi protocols swiftly took action. Lending platform Lista DAO and Binance-backed decentralized exchange PancakeSwap issued statements confirming they were closely monitoring the situation. Lista DAO has initiated an emergency governance vote seeking authorization for forced liquidations of related assets to contain risk exposure.

Lista DAO noted that major borrowers linked to Stable Labs saw borrowing rates surge on its platform without any repayment activity. In response, the protocol executed flash loan liquidations, recovering over 2.9 million USD1 tokens in an attempt to defuse this "ticking time bomb" before contagion spreads.

As of press time, Stable Labs has not commented on the incident. According to The Block's price feed, USDX briefly spiked above $1.11 before crashing to around $0.113, with market panic continuing to escalate.

**Contagion Fears Trigger Emergency Measures** The USDX depegging event triggered high alert across DeFi communities, prompting rapid emergency responses. Lista DAO launched emergency governance proposal LIP 022 on November 6, seeking community approval for forced liquidations affecting USDX markets tied to MEV Capital and Re7 Labs managed vaults.

Prior to the vote, Lista DAO had already liquidated over 3.5 million USDX via flash loans, recovering more than 2.9 million USD1 tokens. The Snapshot platform vote concludes on November 9, with all participating veLISTA token holders currently voting in favor. Lista DAO stated this move aims to "minimize potential losses and maintain healthy market conditions across the ecosystem."

Meanwhile, PancakeSwap warned users: "Our team has noted exposure to affected vaults and is monitoring closely. Please review positions involving these vaults on PancakeSwap."

**Key Timeline (UTC, November 6):** - 09:23: Lista DAO reports 800% borrowing rate spikes in MEV Capital's USDT vault and Re7 Labs' USD1 vault, noting Stable Labs-linked borrowers made no repayments using $sUSDX/$USDX collateral. - 10:55: Re7 Labs proposes forced liquidation plan via Lista DAO's Discord. Lista confirms receipt and prepares governance vote. - 11:08: PancakeSwap advises users to check liquidity pool exposures. - 11:15: Lista DAO launches LIP-022 vote to adjust USDX oracle pricing for liquidation triggers. - 11:50: MEV Capital acknowledges abnormal rates in USDT/sUSDX markets, implements countermeasures including zero position caps and rate model updates.

**Root Causes Remain Unclear** While the exact trigger for USDX's depegging remains uncertain, market speculation points to multiple factors. One theory links the event to November 3's $128 million Balancer exploit, which may have forced liquidations of Stable Labs' Bitcoin and Ethereum hedge positions, triggering massive USDX redemptions.

On-chain activity has raised further questions. Pseudonymous trader Arabe ₿luechip noted that a wallet linked to Stable Labs and Babel Finance founder Flex Yang began borrowing major stablecoins (USDC/USDT) against USDX collateral across Euler, Lista, and Silo protocols this week, writing: "All USDC/USD1/USDT liquidity appears drained by sUSDX/USDX collateral, with borrowers paying 100% interest but showing no repayment intent."

Hyperithm researcher Min questioned whether USDX's portfolio had seen "any active management in over two months."

**Community Backlash Grows** Social media reactions ranged from frustration to calls for legal action. Twitter user BitMania lamented: "Watching USDX go to zero overnight—all efforts wiped out. This is decentralized risk." Reddit commentators warned about "reckless contract upgrades destroying assets," while Telegram groups reportedly contacted law firms about potential class actions.

**Investor-Backed Issuer Stays Silent** Stable Labs, which bills itself as a "MiCA-compliant stablecoin and tokenized asset issuer," raised $45 million at a $275 million valuation in 2024 with backing from NGC, BAI Capital, Dragonfly Capital, and other prominent investors. Despite its prestigious backing, the firm's silence during its flagship product's crisis has deepened market uncertainty.