Hey folks, I’ve written about $USDR in the past and if you’ve been following Crypto Twitter today, you would have no doubt learned that $USDR or Real USD had a significant depeg, crashing all the way down to around $0.51 cents:

The peg collapsed earlier today after roughly 12 million dollars worth of $DAI were redeemed at once, beginning a cascading effect which led to the evaporation of all the collateral backing $USDR, everything except $TNGBL, the “Insurance Fund” and the Real Estate assets.

Although I suspect this story may change drastically over the next few days (or maybe even hours) and this article might age horribly, I thought it might be interesting to share some of what I’ve learned and observed so far…

Much of the backing left of $USDR is illiquid: If the underlying real-yield assets are sold off or re-financed, it’s going to take quite a significant period of time to turn that into fiat that can be returned to investors of $USDR. The bottles of wine and gold bars might not be an issue, but I imagine the real estate will be. Because liquidating real estate will take several months at the minimum, I imagine that the only solution the Tangible has at this point is to gain a crap ton of capital from VCs, because someone needs to plug the hole in order to get rid of the FUD.

The Tangible Store Marketplace is all out of whack: According to the marketplace, the current sale price for a 100g gold bar is a little more than roughly 6 trillion $USDR:

It’s a bit unclear if these prices are supposedly adapted to USDR’s depeg, but seeing as (at time of writing) $USDR is still trading for more than $0.50 cents, that wouldn’t explain why their price is 10000000x’s more than their listed price. The same goes for these 100+ trillion dollar homes:

Apart from this house being extraordinarily overpriced, this does pose a more significant question…

Does Real Estate used as collateral really work? I’m not an expert on real estate by any means, but my guess is that loans were taken out against these homes, and it’s most likely that these loans were not contractually taken out into $USDR, and instead most likely $USD. If that’s the case, then the loans will still need to be paid back in $USD, meaning that either the current tenants will have to deal with higher rents so that the owners can cover payments/interest rates, or else the homes themselves may get repossessed.

This should serve as a warning to every RWA-project out there, especially if they’re tied into Real Estate — In a FUD-filled market, liquidity is key. If the assets that are backing your RWAs are illiquid, the $USDR collapse shows can’t really backstop intense volatility, for instance, a 25% drop in market cap over just a few hours:

With so many different protocols that are looking at RWA-tokenization, I’m worried about how this will impact even bigger protocols such as MakerDAO and $DAI, who may be venturing into RWAs (including real estate) in the future. If $DAI fails as $USDR did, we’re ALL going to have a much bigger problem than a $20 million dollar marketcap loss.

Speaking of collateral, I mentioned this in a previous article, but collateralization by an insurance fund full of altcoins, isn’t really an insurance fund. As you can see in the graphic above, the only a few things that are supporting the “overcollateralization” right now — the $TNGBL token, which is the native altcoin of the Tangible Ecosystem, the Insurance Fund (which is comprised of lot of altcoins such as $BAL, $CRV, and $AURA), with the rest being in Real Estate. Thus, the “103%” collateralization ratio is effectively worthless if there’s only altcoins behind it.

The team hasn’t been silent, but there’s no real solutions/announcements that have been made so far. As far as I can gather, the only announcement was published at 9:30pm UTC time:

The team has stated in their Discord server that they are working on a plan right now, with some speculating that an another announcement will occur in the next few hours (12:30am UTC time).

Conclusion

Personally I was surprised at such a rapid collapse of $USDR and the Tangible Ecosystem. Because there are so many different projects out there that are trying to bridge crypto to the real world, I had hoped that Tangible was on the right track and that their success could bring forward the next steps for Crypto. Regardless, now I can only merely speculate at this point, for the volatility is way past my risk appetite, and I’ll have to wait and see if the Tangible team is able to pull a Hail Mary out of this one…

As a reminder, before falling for the allure of those uber-high-yield-rates, please consider what your own appetite is worth, because $USDR is a perfect example of what the price of those yields can be.

And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. If you want to get access to all my draft links or get an idea about what’s next on my docket before I publish, find me on Friend.tech, where I share all that information in my chatroom. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!

Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!