Binance said it has given out about $283 million to users after three collateral assets lost their pegs for a short time during Friday’s crypto selloff. This caused some traders on its platform to have to unwind their trades.
The company said in an official notice that compensation was finished within 24 hours and covered verified losses related to the depegs of Ethena’s USDe, Binance’s Solana liquid staking token BNSOL, and wrapped Beacon Ether, or wBETH.
Binance also said that the core spot and futures engines kept running during the event and that the depegs came after the market fell, not before it did.
The company said that the total pay would be about $283 million, split into two payments.
The chaos happened on October 10, when the market fell apart and lost tens of billions of dollars in value. It was one of the biggest liquidation days in years.
Jonathan Man from Bitwise said in a postmortem that there were more than $20 billion in forced unwinds as liquidity dried up across venues and prices got out of whack in long-tail tokens. Prices went back up over the weekend.
Binance said that the users who were most affected were those who had posted USDe, BNSOL, or wBETH as collateral for Futures, Margin, Loans, and Earn products during a 40 minute period on Friday evening UTC, when marks changed and transfers or redemptions were delayed for a short time.
The company said it has “fully covered their losses” and is still looking into edge cases. It also reminded customers that trading digital assets is very risky.
The company also talked about some technical changes they were making to lower the chance of it happening again.
Prices for some wrapped or synthetic assets will include more reference points, such as redemption prices and soft floors for building indexes.
Binance also said that it would review risk parameters more often and fix a bug in the user interface that briefly showed zero prices on some spot pairs at the height of the stress.
A follow-up post gave more information about what would happen next with the three assets.
When things get tough, synthetic or wrapped assets may not act the same way as the markets they are based on.
This makes it harder to figure out how to sell them and how to calculate cross-margin, even when the engines are still running.
People will see the quick payout as a way to limit the damage, but it also shows how major exchanges might deal with collateral shocks in the future.
The move comes as Binance works to build partnerships with traditional finance companies and expand its tokenization projects.
In September, Franklin Templeton and Binance worked together to get more tokenized securities out there. This shows the company’s goal of making exchange infrastructure like plumbing for on-chain assets.
Binance says it will keep posting updates on its progress and looking at the remaining user cases that are connected to the price changes on Friday night.
