Terra’s UST stablecoin was unfortunately not the only one stablecoin which has been disconnecting from its link with the dollar over the past few months. There have been so many that it’s hard to keep up. Huobi’s HUSD suffered the same fate, but now the peg of this token has recovered.
HUSD stablecoin also crashes
Last Thursday, HUSD broke its peg with the dollar, after which the token fell from 1 USD to about 0.875 USD according to data from CoinGecko. A drop of about 14% so, alhwell it seems to differ per trading platform. The token is from the Asian exchange Huobi, but it is issued by Stable Universal. In addition to Ethereum (ETH), HUSD lives on Tron (TRX) and on Crypto.com’s Cronos blockchain.
Fortunately for the holders during the crash, the stablecoin has a relatively limited market cap of just $81 million. The volume is around 10 million dollars. The market value is good for 308th place on CoinGecko’s overall ranking, so it’s far from a big token.
This is partly because the market value has shrunk sharply in recent months. At its peak, HUSD had a market value of USD 327 million, while holding up well except for a few small dips. But apparently, holders, and perhaps the publisher, saw that this couldn’t go well for long – the market value is now only a quarter of what it was before.
Regulation is the cause?
Huobic emphasized on Twitter that it is aware of the liquidity problems that would have caused the crash. It has also already worked with Stable Universal to restore the peg. Whether this is reason enough for FTX to support HUSD again is not clear.
#Huobi has always prioritized the safety of our customers’ assets, and will work together with HUSD’s issuer to find a solution and restore its stability as soon as possible.
— Huobi (@HuobiGlobal) August 18, 2022
Furthermore, the stablecoin team says on Twitter that the cause is the closing of the wallets of a number of market makers. They offered liquidity, but to comply with regulations, the developers chose to close the wallets. The result was a lack of liquidity.
FTX removes HUSD from supply
Just under three weeks ago, FTX received the token removed from his offer, although you can still deposit and withdraw HUSD. You can no longer use it as collateral and the tokens are listed separately as HUSD. FTX appeared to be preparing its users for a crash like last Thursday’s.