Ethena's USDe has experienced a dramatic 50% decline in Total Value Locked (TVL) from its peak, a contraction primarily driven by compressing yields in the broader crypto market. As the lucrative returns that initially attracted billions in capital have diminished, capital flight has ensued, highlighting the sensitivity of yield-seeking investors to changing rates. Despite this significant drawdown in TVL, on-chain data suggests a divergence: the usage of USDe in DeFi applications remains resilient or is even rising. This trend indicates a potential shift in the holder base from purely yield-focused capital to users prioritizing utility within the ecosystem. The protocol now faces a liquidity stress test as it adapts to this changing composition of participants. [Update 1] Reports from The Block confirm the 50% drop and emphasize the continued resilience of on-chain usage metrics, reinforcing the narrative that while speculative capital leaves, utility-driven demand persists.