Tron DAO Reserve Takes Steps to Alter 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, overseeing the USDD stablecoin, removed 12,000 Bitcoin worth $732 million from its collateral. This move has led to concerns about the stability and decentralization of USDD.

    Understanding Collateralization Rates

    Collateralization rate measures the value of assets backing a stablecoin relative to its issuance. Justin Sun, founder of Tron, noted that despite the recent Bitcoin withdrawal, USDD remains well-collateralized. According to current data, the collateralization ratio stands at approximately 230%, meaning the value of the assets backing USDD is more than twice the value of the stablecoin in circulation. Sun also compared USDD’s mechanisms to MakerDAO’s DAI, stating that USDD’s system allows for the free withdrawal of excess collateral and requires additional assets or liquidation if their value falls below a certain level.

    Sun’s Reassurances on USDD’s Stability

    Sun acknowledged that USDD's capitalization 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 mentioned plans by the Tron DAO Reserve to upgrade USDD to enhance its competitiveness in the decentralized stablecoin market.

    Shift in USDD’s Collateral Composition

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

    USDD's journey has been bumpy. Initially, it was undercollateralized, and following the collapse of TerraUSD in 2022, transitioned to an overcollateralized model. The Tron DAO initially aimed to maintain a minimum collateralization ratio of 130%, but critics argue that 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

Broadridge and Dinari Integrate Proxy Voting for Tokenized Stocks

Broadridge and Dinari have integrated their systems to allow eligible holders of Dinaris dShares to exercise voting rights through established proxy voting infrastructure.

user avatarTando Nkube

Google Launches TPU 8tx and TPU 8i Max AI Systems to Challenge Nvidia

Google has launched TPU 8tx and TPU 8i Max AI systems to enhance privacy and memory capabilities, aiming to compete with Nvidia.

user avatarKofi Adjeman

Nvidia's Stock Plummets Amid Scandal and Google’s AI Chip Launch

Nvidia's stock has dropped significantly following CEO Jensen Huang's admission of an extramarital affair, coinciding with Google's announcement of new AI chips.

user avatarNguyen Van Long

FATF to Review Jurisdictions with Weak Virtual Asset Oversight

The Financial Action Task Force (FATF) will review jurisdictions with longstanding shortcomings in virtual asset regulation to identify necessary actions for the upcoming plenary.

user avatarSatoshi Nakamura

Stellar Development Foundation Makes Strategic Investment in Marketnode

On October 29, the Stellar Development Foundation announced a strategic investment in Marketnode to enhance institutional access to tokenized investment products in the Asia-Pacific region.

user avatarJesper Sørensen

Tokenization Efforts in Wall Street Face Challenges

Tokenization efforts on Wall Street face challenges as major companies opt out, highlighting volatility and illiquidity in the market.

user avatarRajesh Kumar

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.