Tron founder Justin Sun dismissed concerns after the Removal of 12,000 Bitcoin BTC covering USDDa stablecoin managed by the Tron DAO Reserve.

12,000 BTC worth about 729 million US dollars were stolen by a Address previously linked to USDD collateral.

Some community members reacted to the withdrawal, claims Justin Sun is behind the moveOther queried why Bitcoin was moved from the Tron DAO reserve without a vote.

DAODictatorShip. This is complete theft. If you remove the guarantee without consensus and voting, then cover the damage. For us, USDD fully backed by TRX is worth ZERO. And I am now opening my short position on TRX and USDD, also to @justinsuntron

Good move to sell the warranty…

— Hector Alvarado – ATIPE⚡ (@Atipe_Computers) 23 August 2024

Data from the Tron Governance Page shows that the only question put up for community voting was burning TRX tokens. However, this question about burning tokens dates back to May 2023, meaning there was no current proposal.

According to crypto skeptics SymbioJustin Sun has silently removed 12,000 BTC from USDD collateral. Consequently, the stablecoin is now 100% collateralized by TRX, with the exception of 20 million USDT collateral.

Oh my God @justinsuntron recently quietly removed the 12,000 BTC as USDD collateral and it is now 100% backed by Tron (except for 20 million USDT).

This was the address: 1KVpuCfhftkzJ67ZUegaMuaYey7qni7pPj

— Symbio (@NoCryptFish) 21 August 2024

But Justin Sun reacted To these concernsand called for calm. He noted that the The mechanism of the USDD stablecoin is similar to Maker DAO’s DAI and is not a new procedure.

In addition, Sun stated that a collateral holder can withdraw any amount if the collateral exceeds the required amount. The collateral amount is between 120% and 150%, depending on the safe used.

The Tron founder further explained that a top-up is necessary when collateral falls below a certain level (usually below 110%). Failure to exceed this number may result in liquidations.

Sun noted that USDD The long-term collateralization rate is over 300%which makes capital usage inefficient. He said TronDAO plans to upgrade USDD and make it more competitive and decentralized.

Bitcoin no longer supports USDD

Interestingly Bitcoin address Collateral holdings are no longer visible on the USDD transparency page.

They gave a good overview of how decentralized stablecoins like USDD work, drawing parallels to MakerDAO’s DAI. Here’s a bit more context and analysis:

1. **Collateralisation**:
– The high collateralization rate of over 300% for USDD indeed indicates a very…

— B7ELEPHANT (@B7Elephant) 22 August 2024

USDD’s transparency page shows that the stablecoin is backed by Tether (USDT) and TRX. Data from the site shows that over 744.33 million USDD tokens are circulating in the market.

The total collateral for USDD currently amounts to approx. USDT and TRX worth $1.72 billion in reserveswith a collateralization ratio of over 230%. This means that USDD has more assets than most stablecoins on the market.

For example, DAI has a collateralization of 120%, while USDC and USDT are 100% collateralized.

USDD was launched in 2022 and competed for market share with Terra’s defunct stablecoin UST and others. Although USDD’s value was pegged to the US dollar, price volatility pushed it to an all-time low of $0.92.

However, the USDT and TRX reserves are robust enough to sustain USDD despite the withdrawal of its BTC collateral. Crypto Enthusiast B7ELEPHANT believes that USDD’s high collateralization rate helps maintain stability.

He explained that a certain level of over-collateralization ensures that the Stablecoin is backed by more assets than its circulating supplyIn addition, over-collateralization likely reduces the risk of a decoupling of the USDD from the value of the US dollar.

B7ELEPHANT noticed that the withdrawal of the BTC tokens was necessary for capital efficiency reasons so that they could be used for other purposes.