The USDD stablecoin, issued by the TRON DAO Reserve, no longer has Bitcoin as part of its collateral.
This development occurred with the removal of 12,000 BTC, worth approximately $726 million, from the listed collateral address.
Justin Sun's Explanation
TRON founder Justin Sun addressed the situation on X (formerly Twitter), stating that the move was "not mysterious."
He explained that collateral holders have the freedom to withdraw assets without requiring approval, likening it to the decentralized model of MakerDAO.
Sun also acknowledged that USDD was not capital efficient and maintained a "long-term collateralization rate" exceeding 300%.
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Future Plans for USDD
Sun hinted that the TRON DAO Reserve plans to upgrade USDD, aiming to make it more competitive in the decentralized stablecoin market.
However, he did not confirm whether the DAO was directly involved in the recent Bitcoin withdrawal.
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USDD's Hybrid Model and Market Standing
Originally launched as an algorithmic stablecoin similar to Terra's UST, USDD transitioned to a hybrid model backed by assets like Bitcoin, TRX, USDT, and USDC.
Currently, USDD's market cap stands at around $744 million, placing it just within the top 100 cryptocurrencies, ranked 96th.
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TRX Becomes Primary Backing
With Bitcoin removed, USDD is now primarily backed by TRX, the native token of the Tron blockchain.
Although TRX is more volatile, it has experienced a recent surge, doubling its value over the past year with a market cap of $13.5 billion.
The Tron ecosystem has also surpassed Solana, becoming the second-largest blockchain by total value locked (TVL), boasting $8.2 billion across various DeFi protocols.