Over $2B BUSD burnt in the last seven days

Binance-backed BUSD has seen its supply shrink by around $5 billion as regulators ramp up their scrutiny of the stablecoin.

The massive redemptions have seen the stablecoin drop out of the top 10 cryptocurrencies by market cap, according to CoinGecko.

During this period, Binance burnt $2 billion idle BUSD on the BNB Chain on Feb. 22 — releasing the BUSD collateral on the Ethereum (ETH) chain.

Lido protocol has registered its largest daily stake inflow so far with over 150,000 ETH staked.

Upon reaching this number, a curious (but important) protocol safety feature called Staking Rate Limit was activated.

According to the liquid staking protocol’s Feb. 25 tweet, the “dynamic mechanism” was activated after the daily staking limit of 150,000 Ether was reached.

In a related guide, Lido explained that the “safety valve” is aimed at limiting the amount of staked Ether that can be minted during high inflows, intended to address any potentially negative effects, such as rewards dilution.

Since BUSD issuer

Paxos was ordered to stop other mints of the stablecoin on Feb. 13 by the New York Department of Financial Services (NYDFS), BUSD has seen its supply tank by around $5 billion.

Following the news, blockchain analytical firm Santiment reported that BUSD whales were rapidly dumping the tokens.

The stablecoin also briefly traded at a discount against USDT on Feb. 23, according to Kaiko data. Besides that, BUSD reportedly dropped to a low of

$0.20 against the DAI stablecoin on Feb. 22 as liquidity for the stablecoin fell.

Stablecoins rival profit

Meanwhile, BUSD’s market cap decline has profited rival stablecoins like Circle’s USD Coin, Tether’s USDT, and TrueUSD (TUSD) — which all recorded gains in the last seven days. USDC’s market cap increased by $827 million, while TUSD rose by $131 million and USDT by $466 million, according to CryptoSlate data.

Binance CEO

Changpeng Zhao (CZ) noted that the stablecoin “landscape is shifting.” USDT was the major winner because its market cap was rising, according to CZ.