Huobi’s HUSD becomes the latest stablecoin to de-peg.
It appears that the era of troubles for stablecoins is yet to be over, even as the crypto market embarks on the path to recovery after months of hard knocks from bears and select coin crashes. Now, another one seems to be crashing, and this time around, it involves a large and popular crypto exchange. It’s HUSD, a stablecoin created by the Huobi crypto exchange.
What Is HUSD
According to its profile on Messari, HUSD was launched in 2018 after the Huobi exchange noticed issues with Tether’s USDT, so the exchange decided to create its stablecoin. The ERC-20-based stablecoin was to be used as an aggregate for others like True USD (TUSD), USD Coin (USDC), Paxos Standard (PAX), and Gemini Dollars (GUSD). This way, users could deposit or withdraw any of the four coins, and they would appear on the Huobi exchange in the form of HUSD.
Things are getting thick for the HUSD as it experiences a crash, leading it to de-peg from the usual 1:1 ratio with the USD. At the time of writing, HUSD is trading at around $0.95 after falling to $0.93 marking an above 4% decrease from the normal $1 range. It’s still unclear what led to the de-peg of a stablecoin supported by one of the largest crypto exchanges. However, Bloomberg reported recently that Huobi’s founder was willing to sell his stake in exchange for $3B, which was then denied by the exchange.
Not The First To De-Peg
HUSD is not the first stablecoin to crash or experience a de-peg. Others like Terra’s UST went through the same ordeal merely a few months ago. The event culminated in the total collapse of the Terra ecosystem after Terra Luna crashed hard. Huobi exchange was among the big exchanges that supported the revival of Terra 2.0.
Typically, controlling entities deploy collateral to shore up their coin values and prevent a further crash after a de-peg. TRON’s USDC came close to a severe blow but was saved by enough collateral deployed.
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