USDD’s Bitcoin collateral was removed without a vote from its DAO, but Justin Sun insisted it was a normal occurrence in DeFi.
Tron founder Justin Sun downplayed concerns after removing 12,000 Bitcoin used to back Decentralized USD, a stablecoin managed by the Tron DAO Reserve.
Bitcoin
$60,667
Some on the X site claimed that Sun himself was responsible for the move. While others were concerned that Bitcoin was removed without a vote from the TRON DAO reserve.
TRX
USD 0.1545
Source: Xinbiyou
In the August 22 X statement, Sun downplayed concerns, arguing that the mechanism of USDD is similar to MakerDAO’s DAI, allowing collateral holders to withdraw without approval if the collateral exceeds the amount specified by the system.
“This is part of the basics of DeFi 101. The current long-term collateralization rate of USDD exceeds 300%, which means that the utilization efficiency of funds is not very high.”
Source: Justin Sun
“For the decentralized stablecoin USDD, its mechanism is similar to that of MakerDAO’s DAI and is not mysterious,” he claimed.
Tether
$1.00
USDD’s transparency page no longer lists Bitcoin as collateral following its recent transfer out. Source: TRON DAO Reserve
USDD’s transparency page currently shows over $744 million in circulation. The stablecoin’s transparency page lists $1.7 billion worth of TRX and USDT in its reserves, and its collateralization ratio is over 230%.
This means that USDD does have more assets in circulation than the stablecoin. By comparison, Dai (DAI) has a collateralization ratio of 120%, while USDT and CircleUSD (USDC) have collateralization ratios of just 100%.
USDD was launched in 2022 as a competitor to Terra’s now-defunct TerraUSD (UST) token. Like USDC and USDT, its value is supposed to be pegged to the U.S. dollar.
However, it has experienced some volatility, hitting an all-time low of $0.92 on March 11, 2023, according to CoinMarketCap.
On August 8, the U.S. Federal Reserve took a major enforcement action against Pennsylvania-based Customers Bank, marking the U.S. government’s gradual increase in regulatory oversight of cryptocurrency-related businesses.
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