World Liberty Financial's USD1 stablecoin loses $401M in market cap

The USD1 stablecoin, associated with World Liberty Financial, experienced a reduction in circulating market value of approximately $401 million over a two-week period in October. Market capitalization declined from roughly $4.43 billion on October 6 to approximately $4.02 billion by October 19, representing a 9.1% contraction.

Redemptions were primarily concentrated on the Ethereum and BNB Chain blockchains. On the BNB Chain, an unidentified wallet accounted for approximately $200 million in redemption activity through several large transfers. On Ethereum, net redemptions totaled roughly $184.60 million. Despite the decrease in supply, USD1 maintained its $1 peg, trading consistently between $0.998 and $1.000.

Concurrently, the project’s WLFI token saw a price decline of approximately 5.7%, trading near $0.0538. While the contraction in USD1 supply is documented, there is no established causal link between the stablecoin redemptions and the WLFI token's price movement.