Tron founder Justin Sun has played down concerns after the removal of 12,000 Bitcoin used as backing for USDD, a stablecoin governed by the Tron DAO Reserve.
On Aug. 19, 12,000 Bitcoin (BTC) worth over $729 million was removed from an address previously listed as holding some of the collateral for USDD (USDD), according to blockchain explorer Blockchair.
Some on X allege Sun himself was responsible for the move, while others have raised concerns that the BTC was removed without a vote from the Tron DAO Reserve.
According to the governance page, the latest and only question that has been put to a community vote was whether to use burned Tron (TRX) tokens on May 2023.
Source: Symbio
In an Aug. 22 statement on X, Sun played down concerns, arguing that USDD’s mechanism is similar to MakerDAO’s Dai (DAI) and allows a collateral hodler to withdraw without approval if collateral exceeds an amount specified by the system.
“This is part of the basics of DeFi 101. Currently, USDD has a long-term collateralization rate exceeding 300%, which means that the capital utilization is not very efficient.”
Source: Justin Sun
“Regarding the decentralized stablecoin USDD, its mechanism is similar to MakerDAO’s DAI and is not mysterious,” he claimed.
Cointelegraph has reached out to MakerDAO for comment.
USDD no longer backed by Bitcoin
USDD’s transparency page no longer lists Bitcoin as collateral after it was recently transferred out. Source: Tron DAO Reserve
USDD’s transparency page shows over 744 million USDD tokens are circulating. The stablecoin’s transparency page lists $1.7 billion worth of TRX and USDT in its reserves, giving it a collateralized ratio of over 230%.
This means USDD has more assets than stablecoins in circulation. In comparison, DAI is 120% collateralized, and market leaders USDT and USD Coin (USDC) are 100% collateralized.
Related: Sun rises: Tron’s new memecoin deployer flips Pump.fun
USDD launched in 2022 as a competitor to Terra’s now-defunct TerraUSD (UST) token. Like USDC and USDT, its value is supposed to be pegged to the United States dollar.
However, it has experienced some volatility, falling to an all-time low of $0.92 on March 11, 2023, according to CoinMarketCap.
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