HUSD briefly loses dollar peg

On August 18, the price of the Stable Universal stablecoin HUSD issued by Stable Universal Limited on the Ethereum network fell to 92 cents due to liquidity problems.

The Ethereum-based stablecoin HUSD is backed by a 1:1 dollar reserve. As explained in ForkLog’s comment by representatives of cryptocurrency exchange Huobi, the loss of parity was preceded by large HUSD sales, which put pressure on the token’s price.

“Normally, the restoration of the peg balance should occur naturally. However, if an abnormally large amount of stablecoins is sold and the issuer freezes redemptions of stablecoins for fiat, restoring the balance will be impossible,” they said.

Huobi added that the reasons Stable Universal froze the redemption of HUSD are not entirely clear. They suggested that this may be related to the delisting of the stablecoin from the FTX exchange two weeks earlier.

HUSD’s deviation from parity with the dollar reached its maximum since the token’s launch in 2018.

After talks with Stable Universal, by the morning of August 19, liquidity problems were resolved. HUSD returned to the dollar peg with the full resumption of payments.

“Throughout the incident, Huobi gave users the ability to freely convert HUSD into stablecoins such as USDT and USDC, or other tokens available on the platform,” the exchange team added.

Huobi did not disclose further details, noting that the impact on users was minimal.

Trading volumes and other operations have remained stable in recent days.

“Given the recent volatility in the cryptocurrency market, Huobi advises its users to exercise caution and be aware of potential risks,” the exchange representatives said.

Earlier in June, hackers attacked the DeFi project Nirvana, resulting in the stablecoin NIRV lost parity with the dollar.

For more on the volatile pricing of stablecoins in a bear market, read ForkLog’s article.

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