Decentralized finance protocol Neutrl suspended minting and redemptions for its NUSD synthetic dollar on Aug. 14 after undisclosed circumstances impacted protocol reserves. The protocol also paused other functions on legal advice while assessing the situation.
Neutrl has not identified the specific asset or counterparty affected, nor confirmed whether reserves suffered a realized loss. The protocol provided no timeline for resuming operations or clarifying the cause and scale of any potential impairment.
Approximately $53.6 million in NUSD is currently in circulation. The suspension prevents approved counterparties from exchanging the token for its backing assets. The protocol said it would release timing and next steps once available.
Structured-yield protocol Strata also paused minting, redemptions and related functions for contracts within its Neutrl market, which supports several NUSD-linked products. Strata confirmed its other markets remain operational.
NUSD is designed to track the U.S. dollar by utilizing yield-bearing crypto assets and market-neutral strategies rather than relying on traditional bank deposits for backing. Data from RWA.xyz showed NUSD trading at about $0.9984, with 615 holders and 347 active addresses over the preceding 30 days.
Risk-advisory team BA Labs had flagged a proposed NUSD integration as higher risk in a Feb. assessment, citing concerns regarding counterparty, operational and liquidity exposure. At that time, NUSD supply was estimated at $226 million with reserves at $233.7 million, implying a collateralization ratio of 103.6 percent. More than 87 percent of reserves were held through Fireblocks, with smaller allocations on centralized exchanges.
BA Labs noted that direct redemptions for NUSD were limited to counterparties approved through Know Your Customer or Know Your Business verification. Requests exceeding the liquid buffer could enter a queue with a target completion within 48 hours but no guarantee.
Verification platform Accountable stated on May 25 that its Neutrl dashboard provided continuous cryptographic proof that NUSD reserves matched the protocol's liabilities.
NUSD's market capitalization stood at $53.6 million on Friday, reflecting an 18.4 percent decrease over the past 30 days. Monthly transfer volume declined 72.4 percent to $71.4 million.
