World Liberty's USD1 stablecoin shrinks by $400M in two weeks

USD1, the dollar stablecoin of the Trump family-linked World Liberty Financial, has lost more than $400 million of market capitalization in two weeks as large holders cashed out on Ethereum and BNB Chain. CoinGecko put its value at about $4.02 billion on Monday, down from $4.43 billion on Oct. 6, a drop of roughly $401 million or 9.1%, Cointelegraph reported. World Liberty's proof-of-reserves dashboard showed about $4.01 billion in reserves.

Where the redemptions came from

Blockchain research firm Onchain Benchmark tracked the outflows between Oct. 6 and Oct. 15:

• Ethereum: $184.60 million in net redemptions across 63 token burns. More than 99% of the tokens sent for redemption went through a wallet labeled BitGo, USD1's current issuer and custodian.
• BNB Chain: $200.43 million across just 12 burns. Nearly $200 million came from a single unidentified address, in batches of $30 million to $50 million. The researchers could not tell who controls it or why it redeemed.
• Solana: no new issuance to offset the drop; supply stayed at about $1.42 billion.

Transfers between Ethereum and BNB Chain added up to less than $1 million, so the missing supply was not just moved from one network to the other.

The peg held

Shrinking supply is not the same as a depeg. USD1 traded between $0.998 and $1.000 throughout the period, and Onchain Benchmark found no sign of a sustained break from the dollar. Holders returned tokens and got dollars back, which is how a stablecoin is supposed to work.

Faster than its peers

USD1's supply fell faster on Ethereum than other major dollar stablecoins over the same days:

What comes next

USD1 is due to move to a new issuer once World Liberty's own trust company opens. Onchain Benchmark said that entity would take on a token whose size depends on the decisions of a few large holders, under a charter whose legal basis is being argued in court. Whether new mints rebuild the supply is the thing to watch. For the wider picture, stablecoins keep growing as a payment tool, as our report on $482 billion in stablecoin payments shows.