The Chief Investment Officer of Selini Capital, Jordi Alexander, has raised concerns over the stability of synthetic stablecoins in light of the recent collapses of xUSD and deUSD. While he described USDe as relatively well-managed compared to other synthetic dollar products, Alexander stressed that no protocol in this category can be considered fully risk-free.
According to him, the market for tokenized dollars operates along a risk–return spectrum, where higher yields inevitably imply greater exposure to loss. Some yield-bearing dollar analogs offer small incremental returns above U.S. Treasuries — the so-called “gray swan” risk profile — while others can advertise yields as high as 10–15%, but at the cost of deeper structural fragility.
Alexander argued that USDe has historically delivered better returns than expected for its risk tier, which has helped the asset gain adoption. However, this position could shift if more aggressive competitors enter the market, offering higher yields by embedding hidden leverage or liquidity assumptions.
Even synthetics backed by professional, multi-layered collateral strategies remain vulnerable to external shocks, he warned. For instance, a major exchange bankruptcy could disrupt hedging and liquidity channels, putting positions at risk despite strong underlying custodial safeguards. This type of event represents a systemic vulnerability, not simply an operational one.
Alexander suggested that synthetic stablecoin issuers may be pressured into increasing yields to stay competitive, pushing them toward riskier collateralization practices. To avoid this “yield spiral,” he proposed that protocols expand insurance reserves, rather than using revenue for token buybacks or yield enhancements.
He also cautioned against treating yield-bearing tokenized dollars as strict $1 equivalents. Market behavior often assumes stablecoins are interchangeable with fiat, he said — a mindset that creates a false sense of security and sets the stage for repeated systemic failures.
