Leading stablecoin TrueUSD (TUSD) experienced a temporary loss of its U.S. dollar peg last week after a key usage change on Binance, crypto’s top exchange by volume. According to market data firm Kaiko Research, TUSD plunged below $1 after it was removed as an option for Binance’s Launchpool staking product.
Previously, Binance Launchpool allowed users to stake BNB, FDUSD, or TUSD to earn rewards in newly launched tokens. However, after the exchange unexpectedly eliminated TUSD staking, investors began aggressively selling their holdings.
Over $1 billion TUSD was regularly staked on Binance, representing the majority of tokens in circulation. Kaiko tracked over $150 million in net TUSD selling ahead of its Launchpool removal, triggering initial de-pegging pressures.
But TUSD plunged further upon final confirmation, falling under $0.97 amid a flood of selling from Launchpool farmers exiting positions. In total, Kaiko recorded around 200 million TUSD sold on Binance amidst the policy change.
The research firm noted that TUSD has rebounded significantly following the initial selloff and instability. At the time of writing, TUSD traded at $0.98 as parity was largely restored and selling pressures eased.
Still, the temporary breakdown highlights possible volatility when changes decrease demand for stablecoins. Although TUSD recovered, for now, the de-pegging underscores possible risks even among top dollar-pegged tokens. For major exchanges wielding outsized influence via incentives like staking rewards, removing support can significantly impact associated assets.
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