Tron DAO Reserve, which maintains USDD, pulled $732 million worth of Bitcoin supporting the stablecoin Wednesday, raising fears that it isn't as decentralized as it promises.
USDD, with a circulating supply of $749 million, is nearly completely backed by TRX, Tron's volatile native coin.
However, Tron creator Justin Sun stated nothing to worry about.
Following his X post, Sun told DL News, “Previously, the Tron DAO Reserve would also frequently make adjustments based on the collateral factor.”
Stablecoin collateral factor is the ratio of cryptocurrencies backing it to stablecoins issued.
Sun said on X that USDD has a long-term collateralization rate of 300%. “Capital utilization is not very efficient,” he remarked. Capital utilization assesses how well money is used rather being held as collateral.
According to the USDD website, the stablecoin's collateralisation ratio is 230%, suggesting its assets are worth more than twice its value.
USDD is an algorithmic stablecoin tied to the US dollar launched in 2022. The Tron DAO Reserve manages it, making it seem decentralized.
USDD advertised itself as a DAO, but no vote was granted, therefore the sudden withdrawal of 12,000 Bitcoin supporting USDD aroused suspicions.
