After recovering the dollar parity of the stablecoin HUSD, cryptocurrency exchange Huobi explained what had caused the short-term liquidity problem and assured users that it had been resolved.
Thursday, HUSD started to slide out of its dollar value, trading at $0.92 earlier in the day and falling as low as $0.82 a few hours later. This alarmed members of the community, who speculated on what could happen if the stablecoin does not recover its dollar value.
HUSD was once one of the safest stablecoins. Now it’s off its peg. If HUSD doesn’t return to $1, it’d be the first fully-reserved centralized stablecoin to fail. pic.twitter.com/9WmROQR6lD
— John Paul Koning (@jp_koning) August 18, 2022
HUSD was once one of the safest stablecoins. It is now out of parity. If HUSD does not go back to $1, it would be the first all-reserved centralized stablecoin to fail
In response to concerns, cryptocurrency exchange platform ad immediately that they had been in contact with the stablecoin’s issuer, Stable Universal Limited, and that they were working to restore stability. Before the day was out, the Ethereum-based stablecoin almost recovered its dollar trading, trading at $0.99 per HUSD, before returning to $1 on Friday.
According to the HUSD team, depreciation is should to the decision to close the accounts of market makers in some regions to comply with regulations. The team explained that the time difference in banking hours had created a gap that led to a liquidity problem, causing HUSD to drop from its peg.
Huobi assured then to its customers through an announcement that the problem had been completely fixed and urged its users to pay close attention and be aware of any potential risks due to market volatility.
In the meantime, an exploit that minted $1 billion of Acala (aUSD) caused the stablecoin to crash by 99%. In response to the attack, the Acala team froze the hacker’s wallet, calling into question the platform’s decentralization claims.. Ultimately, the team was able to recover a large portion of the tokens that were not collateralized.
In June, the USDD stablecoin also came off its dollar peg, as one of the funds that had capitalized on TerraUSD’s non-peg (UST) began actively transferring large amounts of USDD. The non-parity did not last long, however, as Tron’s DAO Reserve mobilized 700 million USD Coin (USDC) to defend the peg.
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