World Liberty Financial’s USD1 stablecoin has experienced a notable contraction, shedding more than $400 million in total market capitalization over a two-week period. This downward shift in circulating supply has been primarily driven by large-scale token redemptions concentrated across the Ethereum and BNB Chain networks, though the asset’s dollar peg has remained stable throughout the volatility.
According to market data from CoinGecko, the total market capitalization of USD1 stood at approximately $4.02 billion on Monday. This figure marks a sharp decline from October 6, when the stablecoin’s market cap was recorded at roughly $4.43 billion. The reduction translates to a decrease of approximately $401 million, representing a 9.1% drop in circulating supply over a span of just two weeks. In parallel, World Liberty Financial’s official proof-of-reserves dashboard reported approximately $4.01 billion in backing assets, closely mirroring the circulating supply figures provided by independent crypto tracking platforms.
This contraction extends a period of concentrated redemptions on Ethereum and BNB Chain, according to a detailed report published by blockchain research firm Onchain Benchmark. The research platform’s findings highlight that nearly $200 million in BNB Chain redemptions originated from a single, unidentified wallet address. Despite tracing the massive outflow to this specific source, blockchain analysts have been unable to establish who ultimately controls the funds or what specific motivations drove the large-scale withdrawal.
Despite the substantial reduction in circulating tokens, USD1 successfully maintained its crucial dollar peg throughout the period examined by Onchain Benchmark. Market data shows the stablecoin traded consistently within a tight range between $0.998 and $1.000. Researchers found no evidence of a sustained depegging event, signaling that the rapid decline in circulating supply occurred smoothly without triggering a significant loss of the token’s nominal dollar value or causing panic among broader market participants.
USD1 Supply Decline Outpaces Major Stablecoins on Ethereum
A closer examination of the on-chain data reveals distinct regional patterns in how the redemptions occurred. According to Onchain Benchmark, Ethereum accounted for $184.60 million in net USD1 redemptions, executed across 63 separate token burns between October 6 and October 15. Meanwhile, BNB Chain recorded $200.43 million in redemptions distributed across 12 distinct burn transactions.
On the Ethereum network, more than 99% of the tokens submitted for redemption passed directly through a wallet labeled as belonging to BitGo, which serves as USD1’s current issuer and custodian. On the BNB Chain side, the transfers originating from the unidentified whale address were executed in massive, structured batches ranging between $30 million and $50 million each.
These massive reductions in circulating supply were not offset by new issuance elsewhere in the multi-chain ecosystem. On Solana, for instance, the supply of USD1 remained entirely unchanged at approximately $1.42 billion during the exact nine-day window reviewed by Onchain Benchmark.
Analysts at the research firm point to upcoming structural transitions as a critical juncture for the project. The next major operational tests arrive alongside a planned change in the stablecoin’s issuer. When World Liberty Financial’s newly proposed trust company officially opens its doors, it will assume stewardship of a token whose overall size is heavily dependent on the financial decisions of just a handful of large institutional or whale holders. This transition takes place under a charter whose legal and regulatory footing is actively being debated and argued in court.
Whether fresh token mints on Solana, or expansion across other blockchain networks, will eventually rebuild the total supply, or whether October simply marks the permanent baseline size that USD1 carries into its new era under the upcoming issuer, remains the central question that the next several weeks of supply data will answer.
Furthermore, on-chain cross-chain transfer tracking indicates that the missing supply was not simply shifted between these networks. Direct transfers of USD1 between Ethereum and BNB Chain totaled less than $1 million during the observation period, according to the Onchain Benchmark report, confirming that the tokens were permanently burned rather than merely relocated.
The scale of USD1’s supply contraction on Ethereum was notably steeper than the downward adjustments experienced by several other major US dollar-denominated stablecoins over the same October 6 to October 15 timeframe. Specifically, USD1’s supply on the Ethereum network fell by 11.45%. By comparison, competing stablecoins experienced much milder declines, with USDe dropping by 4.93%, USDC contracting by 2.18%, and the circulating supply of USDT slipping by a minimal 0.76%.
As market participants continue to monitor the shifting tokenomics, the broader ecosystem awaits further regulatory developments and operational milestones for World Liberty Financial’s financial products.
