MSUSD stablecoin plummets 85% after terminating verification contract

The MSUSD token of MainStreet Finance has crashed by as much as 85% in 24 hours. The price dropped from nearly $1 to just $0,151. while the Morpho msY/USDC market reached a utilisation rate of 100%. The trigger is the termination of a verification agreement by an external party, which immediately raises concerns about the protocol’s liquidity.

Verification contract terminated by Accountable

The reason for the sharp price decline is the decision by Accountable to stop its verification agreement with MainStreet Finance. This has caused unrest in the market, as it raises the question of whether the protocol’s reserves are still being adequately proven. Security firm PeckShield flagged the crash and drew attention to the situation.

MainStreet Finance responded quickly, stating that its assets remain fully backed. According to the protocol, the problem lies not in insolvency, but in the failure of an external proof-of-reserves dashboard. The company says it is actively looking for alternative providers to restore transparency.

Morpho market under pressure and millions deployed

The situation is also affecting the USDC market on the Morpho protocol. The msY/USDC market has reached a utilisation rate of 100%, indicating severe liquidity pressure. AlphaUSDC Delta V2, composed by AlphaPING, has an exposure of approximately 30% to this market, amounting to roughly $18 million.

To stabilise the situation, MainStreet Finance has already deployed more than $8 million in USDC to support liquidity. Whether this will be enough to regain user confidence remains to be seen. The market capitalisation of MSUSD currently stands at just $13.1 million, while the 24-hour trading volume exceeds $10.7 million.