The team behind the algorithmic stablecoin USDD within the Tron ecosystem has quietly removed an address holding approximately 12,000 BTC (~$716 million) from the asset’s reserves. This was highlighted by on-chain researcher Symbio.
lmao @justinsuntron silently removed the 12.000 btc as USDD collateral recently and it’s now 100% backed by tron (except for 20mil. usdt).
This was the address: 1KVpuCfhftkzJ67ZUegaMuaYey7qni7pPj
— Symbio (@NoCryptFish) August 21, 2024
On August 19, 4,000 BTC were withdrawn from the wallet identified by the expert in three transactions. At the time of writing, its balance stands at 7,885 BTC.
USDD was launched on May 5, 2022, amidst the success of the UST stablecoin. Following the collapse of the coin from Terraform Labs, the team shifted to an “over-collateralization” model. According to Tron founder Justin Sun, the foundation was intended to consist of “stable and volatile assets.”
Initially, the reserves included Tron tokens (TRX), bitcoins, and USDT. It was intended that their volume would be at least 120% of the total value of USDD.
As of August 22, the coin’s capitalization amounts to $744.25 million, with collateral totaling ~$1.7 billion (228%). However, except for 18.9 million USDT, the stablecoin’s reserves almost entirely consist of 10.9 billion TRX (~$1.68 billion).
As of the end of July, 741 million USDD were backed by:
- 10.9 billion TRX;
- 12,435 BTC;
- 15.7 million USDT.
The total amount of assets was $1.68 billion.
Upon launch, USDD was positioned as a decentralized asset governed by the community. Throughout the coin’s existence, the corresponding page has recorded a single DAO vote in May 2023. It concerned the use of “burnable” TRX in the stablecoin’s reserves. The proposal was eventually accepted.
Sun published a post regarding USDD but did not comment on the disappearance of bitcoins from the reserve fund.
Regarding the decentralized stablecoin USDD, its mechanism is similar to MakerDAO’s DAI and is not mysterious. When your collateral exceeds the amount specified by the system (usually between 120%-150% depending on the vault), any collateral holder can withdraw any amount freely…
— H.E. Justin Sun 孙宇晨(hiring) (@justinsuntron) August 22, 2024
He acknowledged that a collateral ratio of “over 300%” represents “not very efficient use of capital.”
“TRON DAO Reserve plans to spend time in the future upgrading USDD to make it a more competitive decentralized stablecoin in the market,” stated the founder of Tron.
Sun noted that the USDD reserve mechanism is similar to MakerDAO’s DAI, which he called the “gold standard” for DeFi.
Earlier, on August 15, the MakerDAO community voted to cease issuing loans against “wrapped” bitcoin WBTC following news of the coin coming under the control of an enterprise involving Sun.