USD1 Shrank US$385.03 Million in Nine Days as World Liberty Prepares to Take Over Its Issuance

USD1, the dollar token issued for World Liberty Financial, is about to change issuers. World Liberty's trust company won conditional approval from the Office of the Comptroller of the Currency in August and plans to take over issuance and custody of USD1 from BitGo, under a type of charter that a community-bank trade group has asked a federal court to rein in. The supply it would inherit has just shown how fast it can shrink: in the nine days to the October 15 close, US$385.03 million of USD1 was redeemed, 8.71 percent of the token on its three main chains.

USD1 was used to settle MGX's US$2 billion investment in Binance, and World Liberty launched it as an institutional-ready stablecoin. October shows how concentrated its supply can be. Almost all of the decline came through two redemption channels, one on each chain, and on BNB Chain US$200.00 million began at a single address. For a US$4 billion dollar token, that is a concentration its total does not reveal: a few holders can move its supply by close to a tenth within days.

Two chains, two redemption channels

From US$4.42 billion at the October 6 close, USD1's three-chain supply fell to US$4.04 billion at the October 15 close. Ethereum supply fell US$184.60 million (11.45 percent) through 63 redemptions, and BNB Chain US$200.43 million (14.40 percent) through 12. Every redemption was executed by the same USD1 issuance contract, which receives tokens and destroys them. On BNB Chain, US$200.00 million of the US$200.50 million sent for redemption started at a single address, which is not publicly labelled, and moved in round lots of US$30 million to US$50 million. On Ethereum, more than 99 percent came through a wallet labelled as BitGo, USD1's issuer and custodian, fed mostly by two deposit contracts. The chain shows where the tokens went, not who held them before; the redeeming holders and their reasons are not visible.

The tokens were redeemed, not moved to another network. Solana issued no new USD1 over the nine days. The token's smaller deployments, on networks including Tron, Aptos and Mantle, held about US$50 million and fell by US$0.35 million, all of it on Aptos. Transfers between Ethereum and BNB Chain totalled less than US$1 million. USD1 traded between US$0.998 and US$1.000 throughout.

Other dollar tokens on Ethereum did not fall as far. Over the same nine days, measured at the same blocks, USD1 on Ethereum fell 11.45 percent, against 4.93 percent for USDe, which shrank in the same crypto selloff, 2.18 percent for USDC and 0.76 percent for circulating USDT. PYUSD rose 2.57 percent and RLUSD 6.11 percent. A market-wide pullback explains some of the direction; it does not explain the size.

The three-way split ended on October 15

When USD1 was the one major stablecoin split almost evenly across three chains, on September 25, Ethereum held 36.62 percent of its three-chain supply, BNB Chain 31.83 percent and Solana 31.55 percent. At the October 15 close the order had changed: Ethereum 35.39 percent, Solana 35.07 percent and BNB Chain 29.54 percent. Ethereum's lead over Solana narrowed to US$12.92 million, and further Ethereum redemptions on October 16 left Solana fractionally the largest chain by that evening, UTC.

What to watch: the handover from BitGo

BitGo's latest published reserve report, for August 31, counted 4.20 billion USD1 outstanding, matched by US$4.20 billion of cash and government money-market fund shares. The October report, due in late November if it follows the August report's timing, will be the first to show the issuer's side of these redemptions. The peg held through them, and the tokens were destroyed through the issuer's own contract.

The next tests come with the change of issuer. When World Liberty's trust company opens, it will take on a token whose size depends on the decisions of a few large holders, under a charter whose legal footing is being argued in court. Whether fresh mints on Solana, or anywhere else, rebuild the total, or October marks the size USD1 carries into its new issuer, is the question the next weeks of supply data will answer.