World Liberty Financial’s USD1 stablecoin has seen a sharp reduction in circulating supply over the past two weeks, with market capitalization falling by roughly $401 million. The pullback is being linked to large redemptions concentrated on Ethereum and BNB Chain, while the token’s price appears to have held close to its $1 peg.
CoinGecko data cited in the report shows USD1’s market capitalization at about $4.02 billion on Monday, down from around $4.43 billion on Oct. 6—an approximate 9.1% decline. Separately, World Liberty Financial’s proof-of-reserves dashboard reported roughly $4.01 billion in reserves during the same period.
Key takeaways
- USD1’s market capitalization fell by about $401 million (9.1%) from Oct. 6 to Monday, according to CoinGecko data.
- Onchain Benchmark attributes most of the reduction to net redemptions on Ethereum ($184.60M) and BNB Chain ($200.43M) between Oct. 6 and Oct. 15.
- Despite the supply contraction, USD1 remained pegged, trading between $0.998 and $1.000 in Onchain Benchmark’s window.
- Ethereum redemptions overwhelmingly routed through a wallet labeled BitGo, the issuer and custodian referenced in the report.
- Solana issuance did not appear to compensate for the reductions, with USD1 supply remaining near $1.42B over the nine days reviewed.
Market cap drops while the peg holds
The decline in USD1’s market value aligns with the period of “concentrated redemptions” highlighted by blockchain research firm Onchain Benchmark. In its analysis, the firm found that USD1 supply contracted meaningfully on Ethereum and BNB Chain from Oct. 6 through Oct. 15.
Crucially, Onchain Benchmark reported no sustained depegging during the same window. Instead, USD1 traded consistently in a narrow range—between $0.998 and $1.000—suggesting that the drop reflected reduced circulating supply rather than a lasting loss of peg credibility.
World Liberty Financial’s proof-of-reserves dashboard meanwhile showed about $4.01 billion in reserves, which—taken alongside USD1’s stable pricing—frames the episode as a redemption-driven contraction rather than an immediate reserve stress signal (at least within the data presented by the report).
Where redemptions concentrated: Ethereum vs. BNB Chain
Onchain Benchmark’s breakdown attributes the largest net reductions to two networks. Across the 10-day window it examined, Ethereum recorded about $184.60 million in net USD1 redemptions spread across 63 token burns. BNB Chain recorded approximately $200.43 million across 12 burns.
On Ethereum, more than 99% of tokens sent for redemption passed through a wallet labeled BitGo, which the report describes as USD1’s current issuer and custodian. On BNB Chain, the redemptions tied to an unidentified address were described as arriving in larger batches—roughly $30 million to $50 million per batch—rather than a steady flow of smaller transactions.
Onchain Benchmark also found that nearly $200 million in BNB Chain redemptions originated from a single unidentified address. However, the researchers said they could not determine who controlled the funds or why those particular redemptions occurred.
The overall effect was a supply decline on Ethereum that Onchain Benchmark says was steeper than several other US dollar-denominated stablecoins during the same period. Between Oct. 6 and Oct. 15, USD1 supply on Ethereum fell 11.45%. By comparison, the report cited declines of 4.93% for USDe, 2.18% for USDC, and 0.76% for circulating USDT.
No obvious “replacement” issuance on Solana
One question traders and investors typically ask during redemption waves is whether supply is being replaced on other chains. In this case, Onchain Benchmark reported that reductions were not offset by new issuance on Solana during the nine days it reviewed.
Specifically, USD1 supply on Solana was described as unchanged at about $1.42 billion throughout that timeframe. That suggests the contraction on Ethereum and BNB Chain was not simply mirrored by immediate growth on Solana.
Onchain Benchmark also noted that transfers between Ethereum and BNB Chain totaled less than $1 million, according to the report. The implication is that the missing supply did not predominantly shift between those two networks in the way that some observers might expect during internal rebalancing—at least as reflected in the transfer figures discussed.
What changes next: issuer transition watchpoints
The redemption episode is occurring alongside a transition in the USD1 issuer setup. Onchain Benchmark said “the next tests come with the change of issuer,” pointing to an upcoming shift tied to World Liberty’s trust company. The firm added that once this new structure opens, it would take on a token sized by decisions made by a small number of large holders.
The report frames the core uncertainty as whether fresh minting activity—whether on Solana “or anywhere else”—will rebuild total USD1 supply after the October contractions. Onchain Benchmark described October’s supply level as the baseline that USD1 may carry into its new issuer, while emphasizing that subsequent weeks of supply data will determine whether the contraction proves temporary.
Investors watching stablecoin health will likely focus on the combination of peg behavior and supply dynamics. Even with the peg holding tightly in this episode, the magnitude and concentration of redemptions—particularly the large BNB Chain activity tied to a single unidentified address—underscores how quickly circulating supply can shrink when liquidity or holder preferences shift.
For now, readers should monitor whether USD1’s supply continues to decline, whether minting resumes across networks after the issuer change, and whether peg stability remains tight as redemptions evolve into the next phase of World Liberty’s trust transition.
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