Aaaandβ¦. itβs gone.
The $HUSD pool has been around Curve since ancient times. The pool was deployed over two years ago, the 21st pool ever deployed on Curve. For those keeping track, the only pools greyer than $HUSD:
["3pool", "aave", "aeth", "busd", "compound", "eurs", "hbtc", "ib", "link", "pax", "ren", "saave", "sbtc", "seth", "steth", "susd", "usdt", "y", "dusd", "gusd"]
In the unlikely event you happened to be sitting in the pool, itβs too late. The pool is thoroughly drained.
Fortunately for LPs, this does not appear to be a bloody depeg like the carnage of $UST. The pool had been dormant for most of 2022. The big exodus already began in January, when the pool dipped from ~$1MM (already fairly low by Curve pool standards), down to just a few hundred thousand.
Other than some unusually disproportionate transactions of $10MM in June, the pool was stuck in low six figures for the back half of the year.
In August, the pool would suffer its first depeg threat, at which point the remaining liquidity became imbalanced.
A proposal to delist the pool completely appeared earlier this week, at which point there was just $54K in liquidity.
Fortunately for anybody who got stuck with $HUSD amidst the panic sell, Huobi claims theyβll convert $HUSD to $USDT 1:1 for the next two days, so any bagholders may be able to get parity if they rush.
What exactly has been going on behind the scenes? Weβre not privy to the events of the summer, but it appears clear that $HUSD is the latest conquest of the infamous wifeslayer Justin Sun.
With a bit less fanfare in the west than the Twitter takeover, Justin Sun recently Musked Huobi in a near perfect mirror image of events.
β
take over the company
β
accept resignation of the CEO and CFO
β
threaten mass layoffs
β
document it all on Twitter
β charge $8 for priority access
Youβre not the only person who sees parallelsβ¦
Sun has been chronicling his flurry of actions since taking over Huobi in a near daily diary on his Twitter feed, mostly in Chinese. Well worth a read to get a sense of how the takeover has played out.
One of the notable moves was to switch out $HUSD with his own $USDD, in a move reminiscent of Binance phasing $USDC out for $BUSD.
Sun may also be following the footsteps of FTX and setting up shop in the Caribbean. (SBF incidentally purported to have helped finance the takeover). Huobi is eyeing moving its headquarters to Dominica, which has been adopting more crypto-friendly regulation and travel rules.
All of the moves have quietly pumped the the $HT token, giving it a $DOGE-esque pump in yet another Elon parallel.
Stablecoin enthusiasts have little choice but to pay attention to the moves made by Justin Sun. In addition to his role in pushing $USDD (currently the 8th largest stablecoin with a market cap of $723MM), he has outsized influence over Tether, the largest stablecoin with a $69B market cap. The plurality of Tether now exists on Sunβs Tron network. The Tether printer is also claimed to precede other big crypto movements.
Finally, while nobody appears to have been hurt in the $HUSD depeg, what lessons might you draw from the proceedings to avoid potential depeg events in the future?
If you are exposed to any stablecoin through any Curve pool, we recommend the following:
Watch pools regularly for warning signs like:
Low TVL
Heavy imbalance
Unusual activity on Etherscan.
Watch the Curve governance forum for chatter about the coin.
Follow the Crypto Risks Team, which often writes reports on these subjects
Regularly observe https://stablecoins.wtf/
Follow Twitter accounts and hashtags related to the stablecoin
Set news alerts for the stablecoin
Admittedly, itβs a lot of work. Nobody has yet perfected a service that manages to monitor all these disparate sources and create the one-stop shop that is capable of parsing the signal from the noise and provide clear warnings ahead of time.
More resources on the $HUSD sunset: