Decentralized finance protocol Neutrl has suspended minting and redemptions for its NUSD synthetic dollar, citing unspecified circumstances that affected protocol reserves. The protocol also paused other functions on legal advice, preventing approved counterparties from exchanging NUSD for backing assets.
The cause and scale of any potential impairment to reserves remain unclear. Neutrl has not identified the affected asset or counterparty, nor stated whether reserves suffered a realized loss or provided a timeline for resuming operations.
Approximately $53.6 million in NUSD is currently in circulation. The suspension directly impacts this supply, as redemptions are now unavailable.
Structured-yield protocol Strata subsequently announced it paused minting, redemptions and related functions for contracts in its Neutrl market. Strata confirmed its other markets remained operational.
NUSD traded at about $0.9984 on Aug. 15, according to on-chain data from RWA.xyz. The synthetic dollar had 615 holders and 347 active addresses over the 30 days preceding that date.
On Aug. 15, NUSD's market capitalization stood at $53.6 million, marking an 18.4 percent decline over the prior 30 days. Monthly transfer volume for NUSD fell 72.4 percent to $71.4 million in the same period.
NUSD is designed to track the U.S. dollar using yield-bearing crypto assets and market-neutral strategies rather than traditional bank deposits.
In February, risk-advisory team BA Labs classified a proposed Neutrl integration as higher risk, citing concerns related to counterparty, operational and liquidity exposure. The firm noted that direct redemptions were limited to counterparties approved through Know Your Customer or Know Your Business checks. Redemption requests exceeding the protocol's liquid buffer could enter a queue targeted for completion within 48 hours, though without guarantee.
At the time of the February assessment, BA Labs estimated NUSD supply at $226 million and reserves at $233.7 million, implying a 103.6 percent collateralization ratio. More than 87 percent of these reserves were held through Fireblocks, with smaller amounts maintained 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.
