World Liberty Financial's USD1 Shrinks by $401M as Redemptions Hit Ethereum and BNB Chain
World Liberty Financial's USD1 stablecoin saw its market value drop by roughly $401 million over two weeks, reaching about $4.02 billion on Oct. 19 from $4.43 billion on Oct. 6. The decline came from redemptions on Ethereum and BNB Chain, including a nearly $200 million BNB Chain redemption from one unidentified address, while proof-of-reserves showed about $4.01 billion. USD1 traded between $0.998 and $1 and showed no sustained peg break, though the planned issuer change remains a test for future supply.
USD1's market capitalization slipped from $4.43 billion on Oct. 6 to about $4.02 billion by Oct. 19, a 9.1% decrease. Between Oct. 6 and Oct. 15, Ethereum redemptions totaled $184.60 million across 63 burns, while BNB Chain saw $200.43 million across 12 burns. Reserves stood near $4.01 billion.
Almost all Ethereum redemption flow moved through a BitGo-linked wallet. One unidentified BNB Chain address accounted for nearly $200 million, sending $30 million–$50 million batches. Solana supply held near $1.42 billion. USD1 ranged from $0.998 to $1 without a lasting peg deviation. Ethereum supply fell 11.45%, versus smaller drops for USDe, USDC, and USDT. A planned issuer shift remains pending amid court arguments.
The contraction could matter most to USD1 holders, traders, and platforms that rely on its liquidity. Large redemptions may reduce depth on Ethereum and BNB Chain, potentially widening spreads or making exits slower during stress. If the issuer transition and court dispute raise uncertainty, some users may diversify into larger stablecoins, while others may wait for clearer reserve and governance signals. The episode may also remind observers that stablecoin stability depends not only on price but on supply, redemption capacity, and institutional trust.