World Liberty Financial's USD1 stablecoin has lost more than $400 million in market capitalization over the past two weeks, as sizable redemptions on Ethereum and BNB Chain reduced its circulating supply.

Data from CoinGecko on Monday put USD1's market capitalization at roughly $4.02 billion, down from $4.43 billion on Oct. 6 — a drop of approximately $401 million, or 9.1%. Separately, World Liberty Financial's proof-of-reserves dashboard showed about $4.01 billion in reserves backing the token. Because stablecoins are designed to trade at or near $1, moves in market capitalization largely track changes in circulating supply rather than price.

The contraction extends a stretch of concentrated redemptions across Ethereum and BNB Chain, according to blockchain research firm Onchain Benchmark. The research platform traced nearly $200 million of the BNB Chain redemptions to a single unidentified address, though it could not establish who controlled the funds or why they were redeemed. In a typical stablecoin redemption, holders exchange tokens for the reserves backing them, and the returned coins are burned and removed from circulation.

Despite the outflows, USD1 held its dollar peg throughout the period examined by Onchain Benchmark, trading between $0.998 and $1.000. The firm found no evidence of a sustained depegging event, meaning the shrinking circulating supply was not accompanied by a significant loss of the token's dollar value.

USD1 supply decline outpaces major stablecoins on Ethereum

According to Onchain Benchmark, Ethereum accounted for $184.60 million in net USD1 redemptions across 63 token burns between Oct. 6 and Oct. 15, while BNB Chain recorded $200.43 million across 12 burns. On Ethereum, more than 99% of the tokens sent for redemption passed through a wallet labeled BitGo, USD1's current issuer and custodian. The BNB Chain transfers from the unidentified address, by contrast, were made in batches of $30 million to $50 million. With nearly $200 million of the two-week decline traced to that one wallet, the figures show how quickly a stablecoin's supply can contract when its holder base is concentrated.

The reductions were not offset by new issuance on Solana, where USD1's supply remained unchanged at about $1.42 billion during the nine days reviewed by Onchain Benchmark.

The report framed the outflows against a coming change of issuer, with World Liberty's trust company set to take on the token once it opens. "The next tests come with the change of issuer. When World Liberty's trust company opens, it will take on a token whose size depends on the decisions of a few large holders, under a charter whose legal footing is being argued in court," Onchain Benchmark said. "Whether fresh mints on Solana, or anywhere else, rebuild the total, or October marks the size USD1 carries into its new issuer, is the question the next weeks of supply data will answer."

Transfers between Ethereum and BNB Chain totaled less than $1 million, the report noted, suggesting the missing supply was not simply shifted between the two networks.

USD1's supply contraction on Ethereum outpaced several other US dollar-denominated stablecoins between Oct. 6 and Oct. 15. USD1 supply on the network fell 11.45%, compared with declines of 4.93% for USDe, 2.18% for USDC and 0.76% for circulating USDT. Same-window supply comparisons are commonly used to gauge whether redemption activity is specific to one token or shared across the sector.