Ethena's synthetic stablecoin, USDe, has experienced a significant contraction in its Total Value Locked (TVL), which has now fallen to approximately $7.6 billion. This current figure represents a decline of more than 50% compared to the peak levels of roughly $14.8 billion observed in October. The significant drop is attributed to the massive unwinding of leveraged strategies, particularly 'looping' or 'cash and carry' trades in DeFi protocols. As USDe yields have fallen below borrowing costs, these once-popular yield farming strategies have become unprofitable, forcing participants to close positions and withdraw liquidity. Despite the sharp contraction in liquidity, on-chain data suggests that actual usage of USDe remains relatively robust. Transaction volumes have not mirrored the steep decline in TVL, indicating a divergence between speculative capital flight and ongoing utility usage. [Update 1] Additional reporting confirms the TVL decline to $7.6 billion is specifically driven by the unwinding of leverage as yields drop below borrowing costs, though on-chain activity remains high.