The “stable currency” HUSD loses parity with the dollar and nobody knows why

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known as HUSD, the stable coin issued by Stable Universal Limited lost its parity with the dollar this Wednesday (17). Trading at $0.912 at time of writing, no one can explain the reason for the drop.

According to Huobi, an exchange that was involved in the creation of HUSD in 2019 is already working on finding a solution and restoring price stability to the coin. However, the company noted that it is not the issuer of the stablecoin.

Unlike stablecoins like TerraUSD (UST) and Nirvana (NIRV), HUSD is fully backed by fiat assets, their documents note. Therefore, it is possible that the mismatch is only a market problem.

Huobi stablecoin loses parity with the dollar

Despite having a low market cap compared to the market giants at $160M vs. Tether’s $67.5B, HUSD is tied to a big name in the industry, the Huobi exchange.

According to the company, its team is already aware of HUSD’s loss of parity with the dollar and is working on a solution. However, Huobi was unable to cite what caused this stablecoin to lose its value.

“We are aware of the current liquidity issues associated with the HUSD stablecoin, issued by Stable Universal Limited and built on the Ethereum network.. Huobi has always prioritized the security of our customers’ assets and will work together with the HUSD issuer to find a solution and restore its stability as quickly as possible,” Huobi wrote on Twitter.

At the moment, each HUSD is trading at $0.91, down 9% after almost three years without such large variations.

HUSD loses parity with the dollar. Source: CoinMarketCap.

As it is a 100% fiat-backed stablecoin, in theory it is possible that the drop is just a market issue. That is, due to the size of Huobi, involved in its creation the ballast of more than 160 million tokens is estimated to be intact.

However, it is worth noting that the exchange FTX removed HUSD from its USD pegged list 17 days ago. Therefore, it is possible that the stablecoin has a problem that has not yet been disclosed.

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