NUSD Supply Plummets 76% as Neutrl Suspends Redemptions

The protocol has yet to identify the specific assets or counterparties involved in the reserve issue, nor has it clarified whether the event resulted in realized losses. While the synthetic dollar has maintained a price near $0.9984, the suspension leaves approved counterparties unable to exchange NUSD for backing assets. Data from RWA.xyz indicates a 72.4% drop in monthly transfer volume, leaving just 615 holders and 347 active addresses in the wake of the freeze.

This development follows warnings from risk-advisory team BA Labs, which flagged Neutrl for potential counterparty and liquidity risks in a February assessment. At that time, the protocol claimed a collateralization ratio of approximately 103.6%, with the majority of reserves held via Fireblocks. In response to the crisis, the structured-yield protocol Strata has also paused operations for its Neutrl-linked market contracts. Neutrl has not provided a timeline for a potential restart, stating only that further information will be disclosed once the impact of the reserve situation is fully understood.