At a glance
- USD1, the dollar stablecoin of Trump family-backed World Liberty Financial, has shrunk from $4.47 billion on 7 Oct to $4.04 billion on Monday, a fall of about $425 million or 9.5%, according to DefiLlama data.
- Almost all of the drop came from tokens redeemed on Ethereum and BNB Chain. USD1 traded between $0.998 and $1.000 throughout, research firm OnChain Benchmark found.
USD1’s circulating supply was $4.03 billion at 13:50 UTC on Monday, DefiLlama’s stablecoin data show, down from a peak of $4.47 billion on 7 Oct.
On Ethereum, supply fell by $208 million to $1.40 billion. On BNB Chain it fell by $200 million to $1.19 billion. Solana, which had been flat, slipped by $17 million on 16 and 17 Oct to $1.40 billion, so the three largest chains now hold roughly equal shares.
A redemption here means a holder hands tokens back to the issuer for dollars and the tokens are destroyed, or “burned”. Between 6 and 15 Oct there were 63 burns on Ethereum and 12 on BNB Chain, according to OnChain Benchmark.
On BNB Chain, $200.00 million of the $200.50 million sent for redemption came from a single address that is not publicly labelled, in lots of $30 million to $50 million. On Ethereum, more than 99% went through a BitGo-labelled wallet; BitGo currently issues USD1 and holds its reserves. The firm said the chain data show where tokens went, not who held them or why.
The fall is large for a token of USD1’s size. Total stablecoin supply dropped by $3.25 billion over the same period, to $304.65 billion, so USD1 accounts for about 13% of the decline while making up about 1.3% of the market, on our arithmetic from DefiLlama data.
What it changes for users and merchants
For holders, the price stayed within a fifth of a cent of $1. World Liberty’s proof-of-reserves dashboard showed about $4.01 billion in reserves on Monday, Cointelegraph reported. Merchants that accept USD1 are not directly affected: redemptions reduce how much USD1 is outstanding, not how transfers work.
Context
The issuer is due to change. The OCC, the US national bank regulator, granted preliminary conditional approval on 14 Aug to World Liberty Trust Company, a national trust bank that plans to issue USD1 in place of BitGo Bank & Trust. Final approval depends on pre-opening requirements.
The charter type is the subject of the ICBA lawsuit over crypto trust bank charters, filed on 2 Oct.
CryptoWatchDesk last covered USD1 on 7 Oct, when it reported USD1’s push into merchant checkouts via Mesh. For the wider picture, see Monday’s Signal Board on shrinking stablecoin supply and what a dollar stablecoin is.
We found no World Liberty Financial statement on the redemptions. The next marker is the OCC’s final approval for the trust bank, which has no published date.
This article is for information only and is not investment advice.