Overview
HUSD was a USD-backed stablecoin issued by Stable Universal Limited, a company with close ties to the Huobi exchange. Launched in 2018, HUSD was positioned as Huobi's preferred stablecoin, used as a universal USD representation within the Huobi ecosystem. Stable Universal claimed HUSD was fully backed 1:1 by USD reserves held in regulated custodial accounts, with periodic attestations.
In August 2022, HUSD depegged catastrophically. The stablecoin dropped from $1 to approximately $0.30-$0.50 within days. Redemptions were suspended. Users who held HUSD — many of whom trusted it because of the Huobi association — found themselves holding a rapidly depreciating asset with no functioning redemption mechanism.
The depeg occurred against a backdrop of compounding crises:
- Huobi was undergoing a chaotic ownership transition, ultimately being acquired by Justin Sun
- Stable Universal's actual reserves and financial health were opaque
- Broader crypto market stress in 2022 (post-Terra, post-3AC) reduced liquidity
- Regulatory pressure on Huobi in multiple jurisdictions
HUSD never recovered its peg. The stablecoin trades at a fraction of face value (when it trades at all), and redemptions remain effectively non-functional. Users who held HUSD lost 50-70%+ of their value with no realistic recovery path.
Peg Stability
HUSD's peg failed completely and permanently. The August 2022 depeg was not a temporary fluctuation — it was a terminal event. The stablecoin dropped from $1 to $0.30-$0.50 and never recovered. This represents total peg failure — the worst possible outcome for a stablecoin. Before the depeg, HUSD maintained its peg adequately, which is what made the sudden collapse so damaging: users had no warning and no time to exit.
Collateralization
Stable Universal claimed 1:1 USD backing, but the depeg revealed that claims were meaningless without verifiable, accessible reserves. When users attempted to redeem HUSD, redemptions failed — either the reserves didn't exist as claimed, were frozen, or the entity managing them was unable or unwilling to honor redemptions. The attestation framework (periodic reports from auditors) provided a false sense of security. HUSD proved that attestations without continuous proof-of-reserves and legally enforceable redemption rights are insufficient.
Security
HUSD's failure was not a smart contract exploit — the ERC-20 token contract functioned as designed. The security failure was at the institutional layer: the entity backing the stablecoin (Stable Universal) either couldn't or wouldn't honor its commitments. This is counterparty risk, not technical risk. The lesson is brutal: a stablecoin's security is only as strong as the weakest link in its backing chain, and for centralized stablecoins, that link is the issuing entity's solvency and willingness to redeem.
Decentralization
HUSD had zero decentralization. A centralized entity (Stable Universal) issued tokens, claimed to hold reserves, and controlled redemptions. When that entity failed, there was no decentralized fallback, no on-chain collateral to claim, and no governance mechanism for users to protect themselves. HUSD's complete centralization meant complete dependence on a single point of failure — and that point failed.
Adoption
Before the depeg, HUSD had moderate adoption primarily within the Huobi ecosystem. The stablecoin was integrated into Huobi's trading pairs and served as a USD proxy for Huobi users. Some DeFi protocols on Ethereum and HECO (Huobi ECO Chain) also integrated HUSD. Post-depeg, adoption is effectively zero — the stablecoin is worthless and non-functional.
Risk Factors
- COMPLETE DEPEG: HUSD dropped to $0.30-$0.50 and never recovered
- Redemptions failed: Users cannot redeem HUSD for USD at face value
- Opaque reserves: Actual backing was never transparently verifiable
- Entity failure: Stable Universal unable or unwilling to honor commitments
- Huobi transition chaos: Ownership change to Justin Sun coincided with depeg
- No recourse: Users have no meaningful legal or technical path to recover losses
- Total loss scenario: Holders lost 50-70%+ with no recovery prospect
- Dead stablecoin: HUSD is effectively non-functional
Conclusion
HUSD is a total failure. The 0.6 score reflects a stablecoin that depegged permanently, with users suffering catastrophic losses and no recovery path. The HUSD story demonstrates the extreme counterparty risk of centralized stablecoins backed by opaque entities with weak regulatory oversight. Stable Universal's claims of 1:1 backing proved empty when tested. The Huobi association that gave users confidence was itself a liability as Huobi's own troubles compounded the crisis. HUSD should be studied as a warning: "1:1 backed" means nothing without verifiable reserves, enforceable redemption rights, and a solvent, regulated issuer. If you still hold HUSD, it is almost certainly a near-total loss.