- USD1 capitalization fell by over 9%. During the redemption period examined, the exchange rate remained between 99.8 cents and the dollar.
- From October 6 to October 15, redemptions on Ethereum and BNB Chain totaled approximately $385 million. Almost the entire amount on BNB Chain came from one address.
- The owner of the address and the reasons for the redemptions were not identified. One wallet can support multiple clients, so the data does not allow the entire amount to be attributed to one investor.
How much USD1 has disappeared from the market?
The USD1 supply on Ethereum shrank by 11.45%. On the same days, the USDC supply on Ethereum fell by 2.18% and the total USDT supply in circulation fell by 0.76%.
Almost $200 million from one address
About $200.4 million was written off on BNB Chain. Of the $200.5 million sent there for redemption, as much as $200 million came from one address that sent tokens in batches of $30 to $50 million.
It is not known who managed it and why they decided to buy it. He could operate a market maker, an exchange or a fund, but these are hypotheses. The address itself does not show whether the funds belonged to one entity or multiple of its clients.
Transfers between Ethereum and BNB Chain were under $1 million. Researchers therefore attribute the loss primarily to the redemption and burning of tokens, and not to their transfer between these networks. In total, approximately $385 million was purchased on Ethereum and BNB Chain. Solana’s supply remained unchanged at about $1.42 billion, so it did not offset these buyouts.
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The exchange rate remained close to the dollar. What is known about reserves?
Over the nine-day period analyzed by Onchain Benchmark, USD1 traded between 99.8 cents and a dollar. Therefore, the drop in supply did not mean a comparable drop in the price of a single token. Redemption reduces the number of tokens in circulation and does not in itself prove solvency problems.
Cointelegraph also reported that the World Liberty dashboard showed approximately $4.01 billion in reserves. This is a different measure than capitalization, which depends on the number of tokens and their market price. Without comparison of dates, data range and calculation methods, the difference between these values cannot be considered as a deficiency in security.
A large redemption does not mean liquidity problems
The exit of a large holder may be important for the market, especially if he provided liquidity on the stock exchange. There may then be fewer purchase and sale offers, and the difference between their prices may increase. However, turnover and order data would be needed to determine that this happened with USD1. This is not clear from the buyouts themselves.
Who can redeem USD1?
According to Cryptoticker USD1, there is no entry in the ESMA registry, which includes tokens covered by EU MiCA regulations.
This is not investment advice.
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