The stablecoin market looks like it is some way off from reaching stability, as the list of stablecoins losing their peg grows longer and longer. Huobi’s HUSD stablecoin has now become the latest asset to de-peg from its dollar peg, as its price dropped to a low of $0.84.
HUSD Faces Significant Liquidity Issues
The HUSD stablecoin, issued by Huobi, is the latest stablecoin facing liquidity issues and having significant problems maintaining its dollar peg. However, it has emerged that the issuer of the stablecoin, Huobi, abandoned the project back in April itself. Despite its now-terminated association with the stablecoin, Huobi has promised to help address HUSD’s liquidity issues and ensure users are not adversely impacted.
Data from Coingecko showed the value of the stablecoin declined over 11% in the past 24 hours, dropping to $0.84 before rising to $0.87. Curve also reported that the exchange rate in its HUSD/3Crv pool had dropped to $0.94. CoinMarketCap also showed that the stablecoin had dropped to $0.84.
Huobi Issues Statement
Huobi issued a statement confirming that the stablecoin issuer, Stablecoin Universal, was indeed experiencing liquidity issues. However, it also clarified that it had exited its stake in Stable Universal in April 2022 and was no longer associated with the project.
“We are aware of the current liquidity issues associated with the HUSD stablecoin, which is issued by Stable Universal Limited and built on the Ethereum network. Huobi Global exited its stake in Stable Universal in April 2022. We urge HUSD to address its liquidity issues as soon as possible.”
However, Huobi also stated that it would work with the stablecoin issuer and ensure its stability could be restored as soon as possible.
“#Huobi has always prioritized the safety of our customer’s assets and will work together with HUSD’s issuer to find a solution and restore its stability as soon as possible.”
Paxos Delisting
The HUSD stablecoin is a cash-backed stablecoin that Stable Universal Limited issued. The stablecoin is pegged against the US dollar in a 1:1 ratio, with its reserve report indicating that each issued token was backed 100% by cash held in money market accounts.
After being launched by Stable Universal Limited in partnership with Huobi and Paxos, over 1.6 billion HUSD tokens were issued, and transactions worth $3 billion were processed. Paxos was the last custodian of the reserves backing the stablecoin. However, since July 2020, Paxos has not announced or given an update about its stablecoin holdings, with HUSD no longer listed as a stablecoin Paxos is providing custody for. FTX had also announced that it would stop accepting the stablecoin as collateral on its platform or treat it as a part of its USD holdings.
Stablecoins Under Seige
Stablecoins have had a difficult 2022, as their de-pegging has led to a cascading impact on the overall crypto market and left investor confidence significantly shaken. The Terra protocol was central to the crypto market crash, as the TerraUSD, Terra’s algorithmic stablecoin, lost its dollar peg, sending markets into a meltdown, with users and investors losing millions. While founder Do Kwon tried to save the peg, the eventual meltdown set the stage for a crippling crypto market crash that saw almost all major cryptocurrencies tumble.
More recently, the AUSD was hacked, with an exploit in the Acala network that saw a 99% drop in the stablecoins value. Hackers infiltrated the network, issuing over 1.2 billion AUSD tokens which saw the token’s value plummet.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.