Decentralized finance (DeFi) protocol Neutr has suspended minting and redemptions for its NUSD synthetic dollar after unspecified circumstances affected protocol reserves, leaving the cause and scale of any potential disruption unclear.
Thursday, Neutral said It also paused other protocol functions of legal advice while assessing the impact The protocol did not identify the affected assets or counterparties, whether the reserves suffered a realized loss or provide a timeline for resuming operations.
After structured-yield protocol strata said It has suspended minting, redemptions and related functions for contracts on its Neutrl market, which supports several NUSD-linked products. Strata said its other markets are open.
With about $53.6 million in NUSD in circulation, the suspension prevents authorized counterparties from exchanging tokens for its backing assets while Neutrl determines whether its reserves have been compromised. Neutral said it will provide timing and next steps when available.
Cointelegraph reached out to Neutrl for comment but did not receive a response by the publication.
NUSD supply fell 18% in 30 days
According to On RWA.xyz, NUSD’s market capitalization was about $53.6 million on Friday, down 18.4% over 30 days, while monthly turnover fell 72.4% to $71.4 million. However, the data does not establish that the earlier contraction was related to the reserve issue.
Synthetic dollars are designed to track the US dollar using yield-bearing crypto assets and market-neutral strategies rather than deposits held in a bank. RWA.xyz has shown NUSD trading around $0.9984 with 615 holders and 347 active addresses in the previous 30 days.
May 25, Verification Platform Accountable said Its Neutrl dashboard has consistently provided cryptographic proof that NUSD has matched the reserve protocol’s obligations.
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Yet a February assessment by risk-advisory group BA Labs classified A proposed neutral integration as high risk due to counterparty, operational and liquidity exposures. It said direct redemptions were limited to KYC or KYB-approved counterparties and requests to exceed the liquidity buffer could enter a queue with no guarantee of completion within 48 hours.
BA Labs estimates NUSD supplies at $226 million and reserves at $233.7 million, implying a collateral ratio of 103.6%. It said more than 87% of reserves were held through fireblocks, while a smaller amount sat on centralized exchanges.
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