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USX briefly depegs on Solana during holiday-thin liquidity before recovering, highlighting structural risks in DeFi stablecoin markets.
Author: Akshat Thakur
December 26, 2025 — USX stablecoin briefly depegged on Solana after thin holiday liquidity triggered a sharp sell-off on decentralized exchanges. The incident exposed structural liquidity risks in DeFi while highlighting rapid recovery mechanisms and protocol response.
Solstice Finance launched in September 2025 as a permissionless DeFi protocol built on Solana, targeting institutional-style yield strategies for on-chain users. Its flagship product, USX, is a fully collateralized, yield-bearing synthetic stablecoin pegged to the U.S. dollar. Unlike failed algorithmic designs such as TerraUSD, USX is backed 100% and often overcollateralized by fiat-pegged assets including USDC and USDT.
The protocol operates a dual-market structure, combining a permissioned primary market with open DEX trading. Prior to the incident, USX had grown to roughly $320 million in total value locked, making it one of Solana’s most prominent native stablecoins.
The depeg began in the early hours of December 26, 2025, during a period of extremely low holiday liquidity. Heavy sell pressure on decentralized exchanges overwhelmed available liquidity pools, sending USX as low as $0.10 on Orca and around $0.80 on Raydium. The price dislocation was isolated to secondary markets, as primary-market redemptions remained functional at par.
Analysts quickly ruled out hacks or collateral shortfalls, classifying the event as a market-structure liquidity failure. The speed and severity of the move were amplified by thin order books and delayed arbitrage execution.
Jarod 🎙️
@0xJarod
@SolanaFloor @solsticefi Buy da dip folks! This memecoin going to $1!
🚨BREAKING: $USX, a synthetic stablecoin on Solana by @solsticefi, briefly depegged to around $0.92 and has not recovered. While the Solstice team says backing and NAV remain unaffected and overcollateralized, calling it a secondary-market liquidity issue with 1:1 redemptions https://t.co/fPDaDAW8wl
11:08 AM·Dec 26, 2025
C•S•A°|•
@itsCSA
@SolanaFloor @solsticefi We've got stables rugging before GTA6 💀
🚨BREAKING: $USX, a synthetic stablecoin on Solana by @solsticefi, briefly depegged to around $0.92 and has not recovered. While the Solstice team says backing and NAV remain unaffected and overcollateralized, calling it a secondary-market liquidity issue with 1:1 redemptions https://t.co/fPDaDAW8wl
08:38 AM·Dec 26, 2025
casinokrisa
@casinokrisa
@SolanaFloor @solsticefi Secondary-market liquidity issues often signal deeper confidence problems, even if collateral remains intact.
🚨BREAKING: $USX, a synthetic stablecoin on Solana by @solsticefi, briefly depegged to around $0.92 and has not recovered. While the Solstice team says backing and NAV remain unaffected and overcollateralized, calling it a secondary-market liquidity issue with 1:1 redemptions https://t.co/fPDaDAW8wl
07:52 AM·Dec 26, 2025
The timing of the depeg coincided with the conclusion of Solstice’s SLX token sale, which raised approximately $843,000 well below its $4 million target. Many participants had supplied USX liquidity to boost sale allocations and withdrew capital once the sale ended.
This rapid liquidity exit materially reduced DEX depth at the worst possible time. Combined with holiday inactivity, even modest sell orders triggered cascading price impacts. The episode highlighted how incentive-driven liquidity can vanish abruptly once short-term programs conclude.
Solstice Finance responded within hours, coordinating with institutional partners and market makers to inject fresh liquidity beginning around 04:30 UTC. By mid-morning, USX had recovered above $0.94 and continued trending toward its $1 peg.
The team confirmed that backing remained over 100% collateralized, verified through on-chain transparency and third-party solvency reports. Importantly, YieldVault strategies and eUSX positions were unaffected. Solstice also committed to deepening secondary-market liquidity to reduce future vulnerability.
As of December 26, 2025, USX has stabilized near $0.99–$1.00 across major trackers, with TVL holding $317 million. Solstice Finance plans to strengthen cross-venue liquidity, expand collateral options, and proceed with the SLX airdrop in Q1 2026.
While the depeg serves as a cautionary example, many analysts view it as a stress test rather than a fundamental failure. The incident underscores that even fully backed stablecoins remain exposed to market-structure risks in DeFi. How Solstice adapts may shape confidence in yield-bearing stablecoins on Solana going forward.
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