As a seasoned crypto investor with years of navigating the volatile and complex digital asset landscape under my belt, I find myself intrigued by the recent developments surrounding Tron’s USDD stablecoin. The removal of 12,000 Bitcoin from the reserves backing USDD has undeniably raised eyebrows, but Justin Sun’s explanation seems to align with DeFi norms, as suggested by comparisons to MakerDAO’s DAI.
As a researcher, I’ve noticed some speculation arising from the withdrawal of approximately 12,000 Bitcoins, valued at over $729 million, from the reserves backing the Decentralized USD (USDD) – a stablecoin managed by the Tron DAO Reserve. This transaction was detected on August 19th, as Blockchair, a blockchain observer, pointed out that these Bitcoins were withdrawn from an address associated with the USDD collateral. However, Justin Sun, the founder of Tron, has attempted to allay these concerns.
As a long-time user of social media platform x (formerly Twitter), I have witnessed a flurry of concerns recently regarding the removal of a specific Bitcoin. Some users claim that Sun was directly involved in this decision, and it has sparked debate within the community. It’s puzzling to me because no vote had been made by the Tron DAO Reserve, which is the governing body of USDD. In my experience, I have always believed that transparency and fairness are crucial for maintaining trust among users, and this situation seems to challenge those values. As a member of the cryptocurrency community, I hope that the truth behind this issue will be revealed promptly, ensuring the integrity of the platform and fostering an environment where decisions are made in a democratic and accountable manner.
Sun Justifies Bitcoin Removal from USDD as DeFi Norm
Afterward, on August 22, Sun defended himself against the accusations via his official account on X and stated that the removal was related to USDD DeFi mechanics, which share resemblance with MakerDAO’s DAI. He explained that, as far as he understands, this system empowers the collateral holder to liquidate assets without the system’s approval if the collateral value exceeds a predetermined threshold set by the system itself.
As an analyst, I’d express this statement as follows: In my analysis, DeFi scenarios often exhibit this pattern. Moreover, I noted that USDD, our stablecoin, has a collateralization rate exceeding 301%. This implies that USDD carries more than the necessary collateral. While having excess collateral isn’t always optimal in terms of capital efficiency.
Following its deletion, the Bitcoin address is no longer visible on the USDD transparency page, suggesting that the stablecoin primarily relies on Tether (USDT) and TRX, the Tron network’s token, for collateralization. According to the transparency page, approximately 744 million USDD are in circulation, backed by over $1.7 billion in TRX and USDT, indicating that it holds more than twice the required collateral.
In February 2022, USDD was launched as a competitor to UST, Terra’s previously stable algorithmic stablecoin tied to the US dollar. However, like any other stablecoin, USDD is not completely shielded from price changes, and its value dipped to $0.92 in March 2023.
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2024-08-23 15:32