Tron DAO Reserve Removes 12,000 Bitcoins from USDD Collateral

user avatar

by Giorgi Kostiuk

2 years ago

Made with AI

  1. Understanding Collateralization Rates
  2. Sun’s Reassurances on USDD’s Stability
  3. Shift in USDD’s Collateral Composition


    4. On Wednesday, the Tron DAO Reserve, which oversees the USDD stablecoin, removed 12,000 Bitcoins worth $732 million from its collateral backing. This move has led to concerns about the stability and decentralization of USDD, a stablecoin governed by the Tron DAO Reserve.

    Understanding Collateralization Rates

    Collateralization rate is a measure of the value of assets backing a stablecoin relative to its issuance. Justin Sun, founder of Tron, has attempted to address these concerns by providing context around the collateralization practices of USDD. According to USDD’s transparency page, the current collateralization ratio stands at approximately 230%. This means the value of the assets backing USDD is more than twice the value of the stablecoin in circulation. Sun compared USDD’s mechanisms to MakerDAO’s DAI, another popular decentralized stablecoin. He highlighted that USDD’s system allows for the free withdrawal of collateral when it exceeds the required amount, and necessitates additional collateral or liquidation if it falls below a certain threshold.

    Sun’s Reassurances on USDD’s Stability

    Sun acknowledged that the capital utilization of USDD is not highly efficient but emphasized that the long-term collateralization rate is robust. He stated: 'Currently, USDD has a long-term collateralization rate exceeding 300%, which means that the capital utilization is not very efficient.' Sun also noted that the Tron DAO Reserve plans to upgrade USDD to enhance its competitiveness in the decentralized stablecoin market.

    Currently, USDD has a long-term collateralization rate exceeding 300%, which means that the capital utilization is not very efficient.Justin Sun

    Shift in USDD’s Collateral Composition

    The recent removal of Bitcoin from USDD’s collateral has altered the composition of its backing assets. The stablecoin is now primarily supported by Tether (USDT) and TRX. The transparency page of USDD shows that it holds $1.7 billion worth of TRX and USDT, providing a collateralization ratio of over 230%. This new backing structure contrasts with other stablecoins in the market. For instance, DAI is collateralized at around 120%, while major players like USDT and USD Coin (USDC) maintain a 100% collateralization ratio.

    USDD’s journey has been bumpy. Initially, it was undercollateralized, meaning its backing assets were less than the total USDD in circulation. Following the collapse of the TerraUSD stablecoin in 2022, USDD transitioned to an overcollateralized model to enhance stability. However, critics argue that despite the stablecoin’s management by a DAO, significant changes like the Bitcoin withdrawal have occurred without apparent community approval.

Tier I

Sector: #18291

Sealed Hiding Place Room

Resource Cache

Resource Cache

Tier I

Requires 25% Tier Progress to Claim
Meme Cache

Meme Cache

Tier I

Requires 50% Tier Progress to Claim
Equipment Cache

Equipment Cache

Tier I

Requires 75% Tier Progress to Claim

After collecting, hiding places will be stored in your inventory and can be opened with Keys.

Other news

Birdeye Unveils Peak, a New Terminal for Institutional Crypto Research

Birdeye has launched Peak, a new terminal aimed at institutional crypto researchers, consolidating various data and analysis services into one professional workspace.

user avatarMaya Lundqvist

Google Implements New Advertising Policy for Crypto Providers in UAE

Google has announced new licensing and certification requirements for crypto exchanges and software wallet providers targeting customers in the United Arab Emirates.

user avatarLeo van der Veen

Meta's Board Approves New Class of Nonvoting Stock

Meta's board has approved the creation of Class C nonvoting shares to be distributed to existing Class A and Class B shareholders, effective January 19, 2027.

user avatarLi Weicheng

Meta's Financial Strategy Ensures Founder Control

Meta's financial strategy includes plans to potentially raise hundreds of billions in equity while ensuring Mark Zuckerberg retains control over the company.

user avatarAisha Farooq

BitGo Introduces BitGo Labs to Innovate in AI and Cryptocurrency

BitGo has launched BitGo Labs to develop AI-integrated applications for its digital asset infrastructure, starting with the Gokubu app.

user avatarTenzin Dorje

TRON Solidifies Its Position as a Leading Blockchain Network for Stablecoin Settlement

In Q3 2026, TRON reinforced its position as a leading blockchain network for stablecoin settlement, achieving trillions in transaction volume and a record supply of USDT.

user avatarBayarjavkhlan Ganbaatar

Important disclaimer: The information presented on the Dapp.Expert portal is intended solely for informational purposes and does not constitute an investment recommendation or a guide to action in the field of cryptocurrencies. The Dapp.Expert team is not responsible for any potential losses or missed profits associated with the use of materials published on the site. Before making investment decisions in cryptocurrencies, we recommend consulting a qualified financial advisor.