Bitcoin News, Crypto News
Justin Sun Claims Withdrawal of 12K Bitcoin from USDD is Simply ‘DeFi 101’
Aug
Justin Sun Addresses Bitcoin Removal from USDD as Standard DeFi Practice
Justin Sun, the founder of Tron, has minimized worries about the withdrawal of 12,000 Bitcoin from the collateral backing Decentralized USD (USDD), a stablecoin governed by the Tron DAO Reserve.
Clarification on Bitcoin Withdrawal
Recent data from blockchain explorer Blockchair indicates that the 12,000 Bitcoin, valued at over $729 million, was withdrawn from an address that had previously been listed as holding collateral for USDD on August 19. Concerns have been raised by some community members on social media, with allegations that Justin Sun himself orchestrated the withdrawal, and questions were posed regarding the lack of a vote from the Tron DAO Reserve for this action.
As stated on the governance page, the latest community vote regarded the use of burned Tron (TRX) tokens, which occurred in May 2023.
Source: Symbio
In response to the situation, Sun issued a statement on August 22 on social media, downplaying the concerns and explaining that USDD’s mechanism is akin to that of MakerDAO’s DAI. He further clarified that collateral holders can withdraw assets without prior approval if the collateral exceeds the designated limits set by the system.
“This is basic DeFi 101. Currently, USDD maintains a long-term collateralization rate exceeding 300%, indicating inefficiency in capital utilization,” said Sun.
Source: Justin Sun
Sun also emphasized that the USDD mechanism, similar to that of MakerDAO’s DAI, is straightforward and clear.
Current Status of USDD’s Collateralization
The address previously holding Bitcoin as collateral has been removed from the USDD transparency page. Currently, the stablecoin is primarily backed by Tether (USDT) and TRX.
USDD’s transparency page no longer lists Bitcoin as collateral after its recent transfer. Source: TRON DAO Reserve
Currently, there are over 744 million USDD in circulation, with reserves comprising $1.7 billion worth of TRX and USDT, yielding a collateralization ratio exceeding 230%. This indicates that USDD has more assets backing it compared to the stablecoins in circulation.
For context, Dai (DAI) has a collateralization rate of 120%, while USDT and CircleUSD (USDC) are pegged at 100%.
Launched in 2022, USDD was introduced as a competitor to the now-defunct TerraUSD (UST) token. Its expected value is pegged to the US dollar. However, the coin has faced some volatility, notably reaching an all-time low of $0.92 on March 11, 2023, as per CoinMarketCap data.
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