Huobi Bitcoin Exchange’s HUSD Stablecoin Loses Its Dollar Peg

HUSD has become the latest stablecoin to lose its parity with the US dollar, falling by as much as 14.7% on Thursday, according to data from CoinMarketCap.

Issued by Hong Kong-based Stable Universal, HUSD is a ERC-20 token on Ethereum blockchain marketed as a “safe and secure stablecoin” that combines the stability of the US dollar with the efficiency of blockchain technology.

The depegging has resulted in HUSD’s liquidity on the Curve 3pool (3Crv) being skewed, with the decentralized exchange issuing a warning that the current exchange rate for the stablecoin “is too low.”

HUSD was priced at $0.87 on Curve at the time of writing.

Today’s development also came shortly after crypto exchange FTX removed HUSD from its basket of supported USD stablecoins.

While it is not immediately clear what caused the depegging, cryptocurrency exchange Huobi Global, which participated in the stablecoin’s 2019 launch, issued an announcement saying it is aware of the token’s liquidity problem.

“Huobi has always prioritized the security of our customers’ assets, and will work with HUSD’s issuer to find a solution and restore stability as soon as possible,” the exchange wrote on Twitter.

Huobi teamed up with Stable Universal and Paxos Trust Company to issue the HUSD stablecoin in 2019, with Paxos initially acting as a custodian partner for USD reserves backing the asset. Huobi Trust, a Nevada state-chartered retail company, became the project’s new trustee in June 2021.

Not-So-Stable Coins

Stablecoins are cryptocurrencies designed to be redeemable for a fixed amount of a less volatile monetary asset, such as a fiat currency. Such coins are designed to bring efficiency and utility to blockchain payments currently seen with traditional currencies.

But in recent months, a number of stablecoins have lost their dollar peg, some in spectacular fashion.

Terra’s algorithmic stablecoin UST crashed along with its sister token LUNA in May, triggering a wave of redemptions that ultimately led to the collapse of the Terra ecosystem.

When the crypto market fell in May, Tether (USDT), the crypto industry’s largest stablecoin by market cap, briefly lost its dollar peg. A month later, TRON’s stablecoin USDD fell as low as $0.925, but was saved by deploying collateral — albeit several weeks after it was first depegged from the dollar, per CoinMarketCap.

In the latest incident, earlier this week, Polka dot-based decentralized economy (DeFi) platform Acala saw its aUSD stablecoin crash by 99% after hackers exploited a flaw in its liquidity pool. Although the community organized a symbolic burning to destroy the USD 1.29 billion that was compromised by hackers, at the time of writing it has yet to regain its dollar peg, trading at around $0.84.