The USDD stablecoin, issued by the TRON DAO Reserve, has undergone a significant shift in its collateral structure, with the removal of 12,000 Bitcoin (BTC), valued at approximately $726 million. This move has left USDD primarily backed by TRX, the native token of the Tron blockchain, sparking concern and debate within the cryptocurrency community.
Unannounced Collateral Shift Raises Questions
The alteration in USDD’s collateral was first observed on the social media platform X, formerly Twitter, and notably occurred without any official announcement from the TRON DAO. This sudden change in backing has led to discussions about the transparency and stability of the USDD stablecoin.
Justin Sun Responds to Concerns
Tron founder Justin Sun addressed the issue on X, downplaying the significance of the collateral removal. Sun explained that the withdrawal of Bitcoin was not an unusual event and compared USDD's mechanism to that of MakerDAO, where collateral holders can withdraw funds without needing approval. He emphasized that USDD continues to maintain a “long-term collateralization rate” exceeding 300%, though he acknowledged that this structure is not capital efficient.
Sun hinted at potential future upgrades to USDD aimed at improving its competitiveness in the decentralized finance (DeFi) market but did not clarify the extent of the TRON DAO’s involvement in the decision to remove Bitcoin from the collateral.
Read more:TRON founder Justin Sun promotes Sunpump, netizens angrily accuse him of treating retail investors as fools
USDD's Evolution and Current Standing
Originally launched as an algorithmic stablecoin similar to Terra’s ill-fated UST, USDD has since transitioned to a hybrid model, backed by a mix of assets including Bitcoin, TRX, USDT, and USDC. Despite the recent changes, USDD remains pegged to the U.S. dollar and holds a market capitalization of approximately $744 million, placing it just within the top 100 cryptocurrencies.
TRX, now the primary backing for USDD, has experienced increased volatility but remains a prominent cryptocurrency, ranking within the top 10 when stablecoins are excluded. Currently trading at $0.15, TRX’s value has more than doubled over the past year, partly driven by its growing role in the emerging memecoin market.
Read more:Justin Sun’s Realm Under Siege: USDD Depreciation Strikes Again!
Tron Ecosystem's Growth and Legal Challenges
The broader Tron ecosystem has seen significant growth, recently surpassing Solana to become the second-largest blockchain by total value locked (TVL), which stands at $8.2 billion across over 30 DeFi protocols according to DeFi Llama. This growth has been bolstered by the success of SunPump, Tron's memecoin launch platform, which has quickly outpaced Solana’s Pump.fun.
However, this progress comes amid ongoing legal challenges. The Tron Foundation and Justin Sun are currently embroiled in legal disputes in the United States. Last year, the U.S. Securities and Exchange Commission (SEC) sued Sun and the Tron Foundation, accusing them of engaging in the unregistered offer and sale of securities, manipulative trading, and illegal promotion of crypto assets, specifically Tron (TRX) and BitTorrent (BTT) tokens.
Read more:TRON's Daily Revenue Soars to $3.84M, Outshining Ethereum and Solana
Future Implications
The removal of Bitcoin collateral from USDD has raised questions about the stablecoin's future stability and the direction of the Tron ecosystem. While Justin Sun has sought to reassure the community, the lack of transparency and ongoing legal issues may continue to cast a shadow over Tron's developments. As the platform evolves, the community will be watching closely to see how these changes impact the long-term viability and adoption of USDD and TRX.
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