Neutrl opened an early redemption program for NUSD and sNUSD holders on Sept. 17, letting eligible users exchange their tokens for USDC through a dedicated portal. The program follows an August reserve-liquidity problem that halted normal protocol operations, and an on-chain reading of the new redemption contract points to holders getting roughly half the token’s original dollar value.
Holders connect the wallet containing their NUSD or sNUSD, sign an on-chain message to prove ownership and review the redemption details before submitting a request. Completed redemptions pay users in USDC and burn the corresponding tokens, removing them from circulation. Neutrl did not state a recovery percentage in the announcement. It says only that the rate is fixed and based on the liquid reserves the protocol previously disclosed.
The contract reads 0.51
Structured-yield protocol Strata examined the deployed redemption contract, identified as 0xB3f07D3392102fC23264a78e2A1A8B6421123828, and reported a redemptionRate() value of 510000000000000000, equivalent to a 0.51 reference rate. That reading supports claims that holders face a payout close to half of NUSD’s original $1 reference value, though Neutrl has never publicly described the program as a 50% recovery.
“NUSD and sNUSD holders may now submit redemption requests through the official Neutrl Redemption Portal subject to the applicable terms and conditions,” the company said in its Sept. 17 announcement on X.
A separate X user claimed users can recover “around 50%” and must accept a “liability waiver.” The first part is broadly consistent with the 0.51 contract reading. No public Neutrl statement or indexed copy of the redemption terms confirms the waiver claim. The program is expected to remain open until Nov. 14, a date Neutrl describes as expected rather than guaranteed.
How the reserves shrank
The redemption program follows a reserve problem first disclosed in August. Neutrl said it discovered an issue involving a position held within its strategy that affected the liquidity of part of its reserves. After consulting legal advisers, the protocol paused affected smart contracts. Neutrl was explicit that the incident was “not the result of a smart contract exploit, hack, or code vulnerability.”
By Aug. 28, the protocol disclosed roughly $27 million of available liquid assets. Other strategy positions remained on its books with associated gains or losses, but Neutrl said they could not be liquidated at that stage. Management could not confirm the timing, total amount or recovery value tied to the illiquid positions, and unwinding them was expected to take time.
The $27 million figure came after a much larger reserve base earlier in the year. Neutrl’s dashboard showed about $91 million in assets against roughly $90 million of NUSD as of June 21, before the detailed reserve display was placed under recalculation. A separate June snapshot cited by on-chain researchers put the book at about $137 million at an earlier point. Neither figure reflects the value available when redemptions opened.
Supply had already collapsed
NUSD circulation contracted sharply before the redemption launch, falling from about $226 million in February to roughly $53.6 million in August. CoinGecko currently displays about 53.39 million NUSD in circulating supply and a reference price near $0.9983, but the data provider warns the token has not traded on its tracked exchanges for an extended period. The near-$1 quote is an old recorded value, not a price at which holders can exit today, so it should not be compared with the 0.51 contract reading as if both were live markets.
The gap between the tracker price and the redemption rate is itself the story. Anyone holding NUSD who assumed a dollar peg was intact is now choosing between an on-chain payout at 0.51 or waiting on uncertain future recoveries from illiquid positions. There is no third option, because no active trading venue exists for the token.
Why the design made it worse
The reserve issue cuts to the core of how NUSD was marketed. Neutrl described it as a synthetic dollar backed through liquid stablecoins, OTC-acquired crypto positions and delta-neutral trading strategies, not a portfolio limited to cash and Treasury securities. Its April 2025 fundraising release said the strategy involved buying locked altcoins at discounts and hedging exposure with perpetual futures. STIX and Accomplice led the $5 million seed round, with Amber Group, SCB Limited, Figment Capital and Nascent among the investors.
The company argued that structure could maintain liquidity while using positions normally associated with institutional OTC markets. That was a claim made before the 2026 reserve issue, and the August freeze showed how quickly illiquid positions can strand a dollar-pegged token. Neutrl has not provided a final valuation for the illiquid positions or said whether later recoveries could produce an additional payment to holders who accept the current rate.
Knock-on effects
Structured products built on NUSD take the hit directly. Strata said a 0.51 valuation writes its jrNUSD junior tranche down to zero under the loss waterfall, while the remaining value flows to the senior srNUSD tranche. That is how the product was designed to absorb losses, and the redemption rate is now testing it in practice.
Neutrl says the new redemption contract underwent review by a third-party security auditor but has not named the auditor or published the report. Its earlier guidance had targeted early September for the program, making the Sept. 17 launch later than planned. The company cautions holders to use only the official redemption URL, since recovery programs reliably attract fake websites and malicious wallet-connection requests. Timing, amounts and recovery outcomes, per its current disclaimer, are estimates that can change without notice.