HUSD, a stablecoin that is supposed to hold parity with the U.S. dollar, fell almost 15% from its intended $1 peg.

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

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

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

HUSD was priced at $0.87 at Curve as of this writing.

Image: Curve Finance

Today’s developments 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 launch of the stablecoin in 2019, issued an announcement saying that it is aware of the token’s liquidity issue.

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

#Huobi has always prioritized the safety of our customers' assets, and will work together with HUSD's issuer to find a solution and restore its stability as soon as possible.

— Huobi (@HuobiGlobal) August 18, 2022

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

Not-so-stablecoins

Stablecoins are cryptocurrencies designed to be redeemable for a fixed amount of a less volatile monetary good, such as a fiat currency. Such coins are designed to provide efficiencies and utilities 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, sparking a wave of redemptions that ultimately led to the collapse of the Terra ecosystem.

As the crypto market tumbled 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 dropped to as low as $0.925, but was saved by deploying collateral—albeit several weeks after it first depegged from the dollar, per CoinMarketCap.

In the most recent incident, earlier this week, Polkadot-based decentralized finance (DeFi) platform Acala saw its aUSD stablecoin crash by 99% after hackers exploited a bug in its liquidity pool. Although the community organized a token burn to destroy the 1.29 billion aUSD minted by hackers, as of the time of writing it has yet to reclaim its dollar peg, trading at around $0.84.

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