World Liberty's USD1 sheds $401 million in market cap in two weeks

The market cap of World Liberty Financial's USD1 stablecoin shrank by $401 million, or 9.1%, in two weeks. CoinGecko data put it at about $4.02 billion on October 19, against $4.43 billion on October 6.

The cause is heavy redemptions on Ethereum and BNB Chain. Research firm Onchain Benchmark broke them down by network, and its numbers are more interesting than the headline.

$385 million redeemed, split almost evenly between two networks

From October 6 to 15, Ethereum recorded net redemptions of $184.60 million across 63 token burns. BNB Chain saw $200.43 million, but in only 12 operations. The average burn on Ethereum is about $2.9 million, on BNB Chain about $16.7 million. That is nearly a sixfold gap.

Almost $200 million on BNB Chain came from a single unidentified address in batches of $30 million to $50 million. Onchain Benchmark could not establish who controls it or why the tokens were redeemed.

Who received the tokens: a BitGo wallet on Ethereum and an unknown holder on BNB Chain

On Ethereum, more than 99% of the tokens sent for redemption passed through a wallet labeled BitGo. That is USD1's current issuer and custodian, so the mechanics are routine: a holder returns tokens to the issuer and receives dollars.

Shifting between networks does not explain the missing supply. Transfers between Ethereum and BNB Chain totaled less than $1 million. New issuance on Solana, where supply did not change, did not offset the drop either.

The price stayed near a dollar, so there was no depeg

According to Onchain Benchmark, USD1 traded between $0.998 and $1.000 for the whole period studied. The researchers found no sustained departure from the dollar. World Liberty Financial's proof-of-reserves dashboard shows about $4.01 billion, within $10 million of the CoinGecko market cap.

On Ethereum, USD1 is shrinking five times faster than USDC

From October 6 to 15, USD1 supply on Ethereum fell 11.45%. For comparison, USDC on the same network shrank 2.18%, USDe 4.93%, and circulating USDT only 0.76%.

So USD1 lost supply twice as fast as USDe, more than five times as fast as USDC, and about 15 times as fast as USDT. The wider stablecoin market showed no such move.

Risks: concentration and a change of issuer

Onchain Benchmark argues the main problem is not the current outflow but the structure of the token.

• Concentration: the size of USD1 depends on the decisions of a few large holders, and one of them pulled almost $200 million in two weeks.
• The motives are unknown, so neither panic nor a planned rotation can be read from these redemptions.
• The issuer is due to change: World Liberty is preparing its own trust company, and the legal footing of its charter is being argued in court.

What the coming weeks will show

Onchain Benchmark frames the question this way: either fresh mints on Solana or elsewhere rebuild the total, or October sets the size USD1 carries into its new issuer. Supply data over the coming weeks will answer it. At Kurslog we work mainly with USDT and USDC, so this episode is more a market signal than a reason to change familiar exchange routes.