World Liberty Financial’s USD1 stablecoin has lost about $401 million in market capitalization over two weeks, as large redemptions on Ethereum and BNB Chain reduced its circulating supply. The token continued to trade close to its intended value of $1, however, with no evidence of a sustained loss of its dollar peg, according to reporting by Cointelegraph.
USD1 supply falls by more than 9%
CoinGecko data cited in the report put USD1’s market capitalization at approximately $4.02 billion on Monday, down from $4.43 billion on Oct. 6. The reduction of roughly $401 million represents a decline of about 9.1% over the two-week period.
World Liberty Financial’s proof-of-reserves dashboard showed approximately $4.01 billion in reserves separately. A stablecoin’s market capitalization generally reflects the value of tokens in circulation. When holders redeem tokens and the issuer burns them, the circulating supply and market capitalization can decline even if the token continues to trade at close to $1.
The redemptions were concentrated on two blockchain networks. Onchain Benchmark, a blockchain research firm, identified $184.60 million in net USD1 redemptions on Ethereum through 63 token burns between Oct. 6 and Oct. 15. On BNB Chain, it recorded a further $200.43 million across 12 burns.
Transfers between Ethereum and BNB Chain amounted to less than $1 million during the period reviewed. That relatively small volume suggested the reduction was not simply the result of USD1 moving from one network to another.
Large transactions drive the contraction
On Ethereum, more than 99% of tokens sent for redemption passed through a wallet identified as belonging to BitGo, USD1’s current issuer and custodian. On BNB Chain, nearly $200 million in redemptions came from a single unidentified address.
Onchain Benchmark could not determine who controlled that address or why the funds were redeemed. The BNB Chain transactions were carried out in batches ranging from $30 million to $50 million, according to the research cited by Cointelegraph.
USD1’s supply on Solana remained unchanged at approximately $1.42 billion during the nine-day period examined by Onchain Benchmark. As a result, new issuance on that network did not offset the supply reductions recorded on Ethereum and BNB Chain.
The contraction on Ethereum was larger than the declines recorded by several other dollar-denominated stablecoins over the same period. USD1’s supply on the network fell 11.45%, compared with a 4.93% reduction for USDe, a 2.18% decline for USDC and a 0.76% fall for circulating USDT.
Dollar peg holds despite redemptions
The supply decline did not coincide with a prolonged break from the dollar. Onchain Benchmark found that USD1 traded between $0.998 and $1.000 throughout the period it examined. That range indicates the token remained close to its stated dollar value even as a significant amount of supply was redeemed.
For stablecoin holders and market observers, the distinction is important: a reduction in market capitalization measures how many tokens remain in circulation, while a depeg refers to a meaningful and sustained move away from the asset’s target value. In the period covered by the report, the evidence pointed to the former rather than the latter.
Onchain Benchmark said future supply data would show whether new USD1 issuance, including potential minting on Solana or other networks, rebuilds the total supply. The research firm also highlighted the importance of an upcoming change of issuer. World Liberty Financial’s trust company is expected to take on a token whose size is influenced by decisions made by a small number of large holders, while the legal basis of its charter is being disputed in court, according to the firm’s comments cited in the report.
Market picture
Moneyiar market data at 10:14 p.m. local time on Oct. 19 showed Ethereum at $2,407.6198576669, up 0.83% over 24 hours but down 3.43% over seven days. BNB was priced at $731.4578931194, rising 2.12% over 24 hours and falling 1.48% over seven days.
The same Moneyiar data showed Shiba Inu at $0.0000050041, up 1.91% over 24 hours and down 4.57% over seven days. Uniswap stood at $7.296340398, with a 24-hour gain of 3.10% and a seven-day increase of 0.70%.
These market prices provide a snapshot of the broader assets associated with the networks on which the USD1 redemptions occurred. They do not alter the reported figures for USD1’s supply, reserves or dollar trading range.
