Trump's USD1 stablecoin is off to a rocky start, data shows

The launch of President Donald Trump's new dollar-pegged stablecoin, USD1, has encountered significant challenges, showing limited inflows and low organic demand, according to recent analysis. The token, introduced by Trump's decentralized finance venture, World Liberty Financial, has predominantly remained within a narrow speculative niche, as highlighted by Kaiko analyst Adam Morgan McCarthy. "Trump is attempting to enter a rapidly expanding market valued at a quarter of a billion dollars, yet his stablecoin has mostly succeeded only within a very specialized segment," McCarthy remarked. The USD1 token experienced a spike in activity on PancakeSwap, a decentralized exchange operating on Binance's smart chain, with average daily on-chain volumes exceeding $14 million post-listing on May 22. However, trading volume on Binance itself has been significantly lower at $8 million. The coin's limited appeal is further exacerbated by a lack of genuine user engagement. Data from Kaiko reveals that over half of USD1's liquidity on PancakeSwap stems from merely three wallets, raising concerns about the actual demand for the token. "These wallets are likely associated with market-making activities, probably linked to USD1 and the World Liberty Financial team, indicating a lack of organic trading volume," McCarthy added. Donald Trump Jr. expressed to CNBC's "Squawk Box" that USD1 serves as a strategic asset not only for their family but also for U.S. monetary policy, asserting that stablecoins could bolster the dollar's global dominance rather than undermine it. However, unlike established stablecoins such as Tether and Circle, USD1 has yet to achieve widespread adoption. For context, Ripple's RLUSD token has seen approximately $50 million in daily centralized exchange volume, significantly outpacing USD1's trading activity. Analysts at Kaiko suggest that a key factor in USD1's slow uptake is the lack of institutional partnerships or promotional incentives that generally help stablecoins gain early traction. Additionally, World Liberty has launched its native token, WLFI, which also had a lukewarm introduction but managed to raise at least $550 million through token sales. Notably, World Liberty allocates 75% of its profits to family-affiliated entities. The lack of momentum for USD1 on Binance is particularly striking, given the family’s connections to the Abu Dhabi-based MGX fund, which utilized USD1 for a $2 billion investment in March. McCarthy pointed out that such arrangements typically enhance visibility and trading volume, especially when coupled with incentives like trading fee discounts. "However, with USD1, there has been no noticeable impact on trading activity," he noted. The Trump family's ventures in cryptocurrency are under increasing scrutiny, with the $TRUMP meme token recently hosting a contest to reward top holders with a "special VIP tour" and dinner with the former president. Senator Elizabeth Warren criticized the event as an "orgy of corruption," alleging that the president is leveraging his position to enrich himself through cryptocurrency. Inca Digital reported that over $5.2 billion in realized gains from the $TRUMP coin have flowed to top wallets, while more than 590,000 investors collectively faced a loss of $3.9 billion. The disparity between winners and losers has raised alarms over wealth concentration and the potential exploitation of retail traders—issues that critics argue reflect the very financial system that cryptocurrencies aim to disrupt.