USD1 stablecoin loses $401M in market value in two weeks

World Liberty Financial’s USD1 stablecoin fell about $401 million in market value over two weeks, to roughly $4.02 billion on Monday, Oct. 19, from $4.43 billion on Oct. 6. The 9.1% decline followed redemptions on Ethereum and BNB Chain. The company’s proof-of-reserves dashboard showed about $4.01 billion in reserves.

Onchain Benchmark recorded $184.60 million in net USD1 redemptions on Ethereum across 63 token burns between Oct. 6 and Oct. 15. BNB Chain recorded another $200.43 million across 12 burns during the same period.

Nearly $200 million of the BNB Chain redemptions came from one unidentified address, according to the research firm. The address sent the tokens in batches of $30 million to $50 million. Onchain Benchmark could not determine who controlled the address or why the funds were redeemed.

On Ethereum, more than 99% of tokens sent for redemption passed through a wallet associated with BitGo, USD1’s current issuer and custodian. Transfers between Ethereum and BNB Chain totaled less than $1 million.

USD1’s supply on Solana remained near $1.42 billion during the nine-day period. New issuance on Solana did not offset the redemptions on Ethereum and BNB Chain.

USD1 traded between $0.998 and $1 during the period reviewed. Onchain Benchmark found no evidence of a sustained loss of the stablecoin’s dollar peg.

On Ethereum, USD1’s supply fell 11.45% between Oct. 6 and Oct. 15. During the same period, USDe’s supply fell 4.93%, USDC’s declined 2.18% and circulating USDT’s fell 0.76%.

Onchain Benchmark described the planned issuer change as a test for USD1’s future supply. “The next tests come with the change of issuer,” the firm wrote. It added that supply would depend on decisions by large holders and whether new issuance on Solana or other networks replaced the redeemed tokens.

World Liberty Financial has said its trust company will become USD1’s issuer. The planned change comes while the trust company’s legal status is being argued in court.