Decentralized finance protocol Neutrl suspended minting and redemptions for its NUSD synthetic dollar on Thursday, citing legal advice following unspecified circumstances that affected the protocol's reserves. The suspension prevents approved counterparties from exchanging approximately $53.6 million in NUSD tokens for their backing assets. Neutrl has not identified the specific asset, counterparty, or whether a realized loss occurred.
Structured-yield protocol Strata 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.
NUSD traded at approximately $0.9984 on Friday, according to RWA.xyz data, with market capitalization at $53.6 million—an 18.4 percent decline over 30 days. Monthly transfer volume fell 72.4 percent to $71.4 million, though RWA.xyz did not connect this earlier contraction to the current reserve issue. The token had 615 unique holders and 347 active addresses over the period.
NUSD maintains a dollar peg using yield-bearing crypto assets and market-neutral strategies, distinguishing it from traditional stablecoins backed by bank deposits.
Risk-advisory firm BA Labs had designated a proposed NUSD integration as higher risk in a February assessment, citing counterparty, operational, and liquidity exposure. The firm noted that direct redemptions were limited to KYC or KYB-approved counterparties, with requests exceeding the protocol's liquid buffer entering a queue targeted for 48-hour completion but carrying no explicit execution guarantee.
BA Labs estimated NUSD's supply at $226 million in February, with reserves totaling $233.7 million—a collateralization ratio of 103.6 percent. Over 87 percent of Neutrl's reserves were held through Fireblocks, with smaller amounts on various centralized exchanges.
Verification platform Accountable stated on May 25 that its Neutrl dashboard continuously provided cryptographic proof that NUSD reserves matched protocol liabilities.
