Neutrl Launches NUSD Redemption Program Amid Strata Tranche Losses

Neutrl has initiated a redemption program for its NUSD token, offering holders a rate of 0.51 USDC per NUSD. This represents a significant shortfall of 49% from the token's intended $1 value. The redemption process allows holders of NUSD and sNUSD to submit requests for USDC, with the corresponding tokens being burned. However, details regarding the conversion for sNUSD were not disclosed in the announcement.

The current valuation of NUSD is expected to deplete the first-loss buffer in Strata's Neutrl market. Strata plans to execute an update that will effectively write the junior NUSD (jrNUSD) to zero, while setting the senior NUSD (srNUSD) to a value of 1.23971. Withdrawals will be processed in sNUSD at these revised share values, rather than directly in USDC.

Concerns have been raised regarding the redemption terms, as users must waive recourse against Neutrl for all tokens upon participating in the program. Neutrl's announcement encourages users to verify wallet ownership through an onchain message, but it does not explicitly label this requirement as a liability waiver. The redemption portal was temporarily inaccessible during reporting, hindering independent verification of the terms.

Neutrl's liquid assets are reported to cover approximately 50.6% of the circulating supply of NUSD, which totals around 53.39 million tokens. The protocol had previously paused affected smart contracts due to liquidity issues, clarifying that the problem was not due to a smart contract exploit or vulnerability. Strata's scheduled update was confirmed on Ethereum on September 17, with the execution expected to occur on September 19.

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Source: KLEA News