Using 27 million in cash to share a circulation of 53.5 million, is this discounted redemption a stop-loss channel, or a coercive "霸王条款" that forces retail investors to recognize losses?

Written by: Sanqing, Foresight News

On September 17th, the decentralized yield protocol Neutrl announced the opening of the redemption portal for NUSD and sNUSD. Holders can exchange at a fixed rate for USDC, and the tokens will be burned after redemption; the exchange window is expected to remain open until November 14th. According to on-chain contract information, the redemptionRate parameter of Neutrl’s redemption contract returns a value of 510000000000000000, which, when converted to 18 decimal places, equals 0.51, meaning each NUSD can be redeemed at a fixed ratio of 0.51 USDC.

Five Weeks of Suspension, Only to Wait for the "Half Price" in the Contract

The only named founder and CEO of Neutrl is South African entrepreneur Behrin Naidoo. He graduated early from the University of Cape Town and the London Business School, and previously worked at PwC, the South African financial stock research department of JPMorgan, and RMB/RMI, later participating in the establishment of the liquidity management protocol Fyde Treasury.

The operational entity behind the protocol is Caverna Auctus Inc., registered in Panama. In April 2025, Neutrl completed a seed round of financing of approximately 5 million dollars, with lead investors being the UK asset lock-up OTC platform STIX and the American Boston venture capital fund Accomplice, with other participants including Amber Group, Nascent, Figment Capital, and SCB Limited, a subsidiary of Susquehanna, among other angel investors supporting it, including Ethena founder Guy Young and Arbelos co-founder Joshua Lim.

Among them, the leading investor STIX is a core piece of Neutrl's business puzzle. STIX is an OTC trading platform focused on illiquid and locked tokens. Its founder, Taranveer Sabharwal, also served as a founding advisor for Fyde Treasury and has had previous interactions with Behrin.

In Neutrl's flywheel, STIX is both the seed round lead investor and one of the key "supply" channels for discounted locked tokens. Users deposit USDC, USDT, or USDe to mint NUSD, staking it as sNUSD to earn floating yields; the protocol then uses channels like STIX to purchase discounted OTC positions with lock-up periods and hedges coin price fluctuations with perpetual short positions in the derivatives market.

This design deeply intertwined the protocol with a specific OTC distribution network from the early stages, and the terms had long made it clear that post-minting, asset ownership belongs to the company, and tokens legally belong to revenue debt rights rather than ownership rights over the deposited principal.

Shorting Cannot Hedge Liquidity Mismatch

However, shorting only smooths out the ups and downs of the token's market price but cannot manage the deadlock of liquidity caused by locked-up assets that cannot be realized or counterparty failure to deliver.

The liability side provides the market with instant liquid liabilities accounted at 1 dollar, while the asset side is tied up with locked illiquid positions that cannot be realized, a timing mismatch that was buried from the initial design of the protocol. Neutrl's tweet recorded that its Season 1 peak asset management scale was approximately 230 million dollars.

In early 2026, BA Labs, as the risk advisor to Summer.fi's high-risk treasury, marked Neutrl as Higher Risk in an assessment of whether sNUSD could enter the treasury, indicating that its counterparty and operational risks are high. (Note: This forum proposal is only a third-party risk control opinion; subsequent incidents of protocol security at Summer.fi in July relate to independent code attacks and are unrelated to Neutrl's asset redemption and strategy mechanisms.)

The evaluation was subsequently referenced in the governance forum of Summer.fi in discussions about the treasury admission proposal for sNUSD. In the subsequent February assessment, it recorded that the supply was about 226 million dollars and reserves about 233.7 million dollars, with over 87% held in custody by Fireblocks, with the core exposure directly pointing to liquidity and counterparty risk, and the direct redemption channel limited only to KYC/KYB institutional users, with excess withdrawals facing a non-rigid 48-hour queue.

On August 13th, Neutrl suddenly announced the suspension of minting and redemption, with the announcement simply stating that "reserves have been affected," and emphasized in subsequent announcements that no hacks or code vulnerabilities had occurred, but did not clarify whether it was positions, counterparties, or liquidity issues.

On the same day, approximately 3.51 million dollars of liquidity was withdrawn from the NUSD/USDC pool on Curve and subsequently blacklisted, while the official account simultaneously disabled Twitter comments and set the community channel to read-only. At that time, the external market capitalization of NUSD had fallen to about 53.5 million dollars.

On August 28th, Neutrl first provided verification data, stating that immediately available liquid assets were about 27 million dollars, while the rest of the assets "currently cannot be realized," with the recovery cycle and amount completely unconfirmed.

This 27 million dollars in liquid cash is roughly half of the circulation of about 53.5 million dollars at the time of suspension, which aligns with the redemption ratio of 0.51 provided on September 17th. This feels more like directly distributing the remaining tokens using cash that was clear at that time, rather than completing the liquidation results after penetrating evaluation.

As for how much value remains in those unrealized ongoing positions, Neutrl, STIX, or any other third party have not yet made a statement.

Only Refunds with Acknowledgment of Loss?

For token holders, the redemption mechanism directly pulls all pledged and non-pledged positions back to the same starting line. sNUSD must first be unstaked into NUSD and then redeemed for USDC at the fixed rate of 0.51.

Accompanying the discounted redemption comes widespread skepticism in the community regarding the substantive nature of the redemption process. Neutrl officials defined this as the usual "terms and conditions," stating that holders need to connect their wallets and sign on-chain messages to "verify wallet ownership," making it impossible to redeem without signing. Legally, whether this signature constitutes a waiver of claims to the remaining assets currently lacks definitive judicial rulings.

The impact also spread to downstream markets. The structured yield protocol Strata had previously set up a market for Neutrl worth about 1.7 million dollars, splitting sNUSD into priority class srNUSD and subordinate class jrNUSD which bears the first loss.

On September 17th, Strata monitored the 0.51 redemption rate given by Neutrl's contract, pointing out that this is the only observable immediate exchange reference. Due to the extent of losses completely breaching the subordinate protection cushion, Strata, according to its rules, wrote down the net value of jrNUSD to zero, and all approximately 1.5698 million sNUSD held by the strategy were fully allocated to approximately 1.3472 million srNUSD to absorb the losses. Priority class holders would recover their assets after the 48-hour time lock expired; they still returned sNUSD to their wallets and would need to go to the Neutrl portal to accept the 0.51 discount to realize it.

From Neutrl to other nested protocols, the disclosure gap has always remained unfilled.

On-chain research institution D2 Finance retrieved historical data from Neutrl's dashboard, showing that as of June 7th, 2026, the protocol's asset side recorded a reserve of about 137 million dollars, among which only about 12.52 million dollars were specifically marked as discounted locked OTC positions, with the majority being three undisclosed substantial positions and counterparties (approximately 41.96 million, 35.77 million, and 21.19 million dollars respectively).

In Neutrl's accounting logic, discounted spot assets are recorded conservatively in liquidity, while perpetual shorts and liquidity buffers occupy most of the balance sheet; however, in the absence of specific assets and counterparties disclosed by the officials, outsiders have no way to know which positions have actually devalued.

By the end of August, the officials acknowledged that cash as immediate liquid assets had only about 27 million dollars left, while the vast majority had been classified as "currently unable to realize." Which OTC positions experienced issues? What kind of depreciation and redemption payment has the asset side's balance reserve gone through? What is the actual extent of devaluation?

Neutrl has not yet publicly produced a statement to address these numerous concerns. For synthetic dollars that lack continuous independent verification of asset reserves, adequate balance sheet collateral and whether full redemption can be achieved are not the same concept. Furthermore, regarding the possibility of a second redemption beyond the current 0.51, Neutrl has made no commitments thus far.