Decentralized finance protocol Neutrl has suspended minting and redemptions for its NUSD synthetic dollar, citing unspecified circumstances that affected protocol reserves. The protocol paused other functions on legal advice Thursday without disclosing the affected asset, counterparty, or whether reserves suffered a realized loss.
With approximately $53.6 million in NUSD circulating, the suspension prevents approved counterparties from exchanging the token for backing assets. Neutrl provided no timeline for resuming operations.
Structured-yield protocol Strata subsequently paused minting, redemptions and related functions for contracts in its Neutrl market, which supports several NUSD-linked products. Strata said its other markets remain operational.
Blockchain analytics firm RWA.xyz reported NUSD's market capitalization at about $53.6 million Friday. The token traded at approximately $0.9984 with 615 holders and 347 active addresses over the prior 30 days. Monthly transfer volume for NUSD fell 72.4 percent to $71.4 million, though RWA.xyz data does not establish a direct link between this earlier contraction and the current reserve issue.
NUSD is designed to track the U.S. dollar using yield-bearing crypto assets and market-neutral strategies rather than bank deposits.
A February assessment by risk-advisory team BA Labs had classified a proposed Neutrl integration as higher risk, citing counterparty, operational and liquidity exposure concerns. BA Labs noted that direct redemptions were limited to KYC or KYB-approved counterparties, with requests exceeding the liquid buffer entering a queue targeted for completion within 48 hours but without guarantee.
At the time of its February assessment, BA Labs estimated NUSD supply at $226 million and reserves at $233.7 million, implying a 103.6 percent collateralization ratio. The firm added that over 87 percent of reserves were held through Fireblocks, with smaller amounts on centralized exchanges.
On May 25, verification platform Accountable stated that its Neutrl dashboard provided continuous cryptographic proof that NUSD reserves matched the protocol's liabilities.
