Decentralized finance protocol Neutrl has suspended minting and redemptions for NUSD, its synthetic dollar, citing unspecified circumstances affecting protocol reserves. The protocol also paused other functions on legal advice while assessing the impact.
The cause and scale of any reserve impairment remain unclear. Neutrl has not identified the affected asset or counterparty, nor confirmed whether a realized loss has occurred. No timeline for resuming operations was provided.
Approximately $53.6 million in NUSD is currently in circulation. The suspension prevents approved counterparties from exchanging the synthetic dollar for backing assets.
Structured-yield protocol Strata confirmed it paused minting, redemptions, and related functions for contracts within its Neutrl market, which supports several NUSD-linked products. Strata said its other markets continue to operate.
NUSD is designed to track the U.S. dollar by leveraging yield-bearing crypto assets and market-neutral strategies rather than relying on bank deposits. On-chain data shows NUSD trading at approximately $0.9984.
NUSD's market capitalization has fallen 18.4 percent over the past 30 days, while monthly transfer volume dropped 72.4 percent to $71.4 million. The synthetic dollar's supply has declined about 76 percent from an estimated $226 million in February to the current $53.6 million, a reduction that predates the recent suspension.
A February assessment by risk-advisory team BA Labs had classified a proposed Neutrl integration as higher risk, citing counterparty, operational, and liquidity exposure. At that time, BA Labs estimated NUSD supply at $226 million and reserves at $233.7 million, implying a 103.6 percent collateralization ratio. Over 87 percent of reserves were held through Fireblocks, with smaller amounts on centralized exchanges.
BA Labs also detailed NUSD's redemption mechanics, noting that direct redemptions were limited to KYC or KYB-approved counterparties. Requests exceeding the protocol's liquid buffer could enter a queue targeted for completion within 48 hours, though without guarantee.
In May, verification platform Accountable stated its Neutrl dashboard provided continuous cryptographic proof that NUSD reserves matched the protocol's liabilities.
Neutrl currently lists 615 holders and 347 active addresses for NUSD over the last 30 days.
