Decentralized finance protocol Neutrl suspended minting and redemptions for NUSD, its synthetic dollar, effective Thursday, Aug. 13, citing unspecified circumstances that affected its reserves. The protocol has not identified the specific asset or counterparty involved, nor confirmed whether reserves suffered a realized loss.
Neutrl also paused other protocol functions on legal advice while assessing the impact. A timeline for resuming operations was not provided.
Structured-yield protocol Strata subsequently paused minting, redemptions and related functions for contracts within its Neutrl market, which supports several NUSD-linked products. Strata confirmed its other markets remained operational.
Approximately $53.6 million in NUSD tokens are in circulation. The suspension prevents approved counterparties from exchanging the synthetic dollar for backing assets. NUSD is designed to track the U.S. dollar using yield-bearing crypto assets and market-neutral strategies, distinct from traditional stablecoins backed by bank deposits.
On Friday, Aug. 14, RWA.xyz data showed NUSD trading at approximately $0.9984. The synthetic dollar's market capitalization had declined 18.4 percent over the preceding 30 days. Monthly transfer volume for NUSD fell 72.4 percent to $71.4 million during the same period, though this data does not establish a direct link to the reserve issue.
In February, risk-advisory team BA Labs classified a proposed Neutrl integration as higher risk, citing counterparty, operational and liquidity exposure concerns. BA Labs noted that direct redemptions were restricted to KYC or KYB-approved counterparties and that redemption requests exceeding the protocol's liquid buffer could enter a queue targeted for completion within 48 hours but without a guarantee.
At the time of BA Labs' February assessment, NUSD supply was estimated at $226 million with reserves totaling $233.7 million, implying a collateralization ratio of 103.6 percent. More than 87 percent of reserves were held through Fireblocks, with smaller amounts on centralized exchanges.
Verification platform Accountable stated on May 25 that its Neutrl dashboard provided continuous cryptographic proof that NUSD reserves matched the protocol's liabilities. The current suspension contradicts that prior assurance.
