Tom Lee reviews the USDE de-pegging event: how code vulnerabilities and leverage triggered a chain liquidation.

[Coin World] Tom Lee recently talked about a rather frightening issue: the automation mechanism in the crypto market could actually become a trigger at a critical moment.

The case he mentioned is as follows - the USDE stablecoin maintained a value of 1 dollar on other platforms, but suddenly the internal quotation of a certain exchange collapsed to 0.65 dollars. The problem arose: this platform already had insufficient liquidity, and when the ADL automatic deleveraging system saw the collateral 'plummet', it immediately began indiscriminate liquidation. User accounts fell like a house of cards, and within minutes, tens of thousands of accounts were liquidated.

What's even more critical is that this operation wasn't a human error; it was a problem with the logic hard-coded in the system. That platform didn't even bother to fetch the real prices across platforms, but instead relied solely on its internal, unanchored quotes as the basis for liquidation. Tom Lee characterized this as a systemic flaw — the defect in the technical architecture directly amplified the risk.

The subsequent impact is also very nasty: the capital of market makers and institutions has been significantly weakened, the shrinking trading volume has further driven down coin prices, and these players can only continue to reduce their balance sheets to survive, leading to further depletion of market liquidity.

Tom Lee concluded quite straightforwardly: There are definitely bugs in the code, but what really can kill the market is leverage.