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Home » Concerns Rise Over Tron’s USDD After $732M Bitcoin Withdrawal From Reserve

Concerns Rise Over Tron’s USDD After $732M Bitcoin Withdrawal From Reserve

John Hobbs by John Hobbs
August 24, 2024
in Currencies
Concerns Rise Over Tron's USDD After $732M Bitcoin Withdrawal From Reserve
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The crypto community has shown concerns about the Tron-based stablecoin USDD after the Tron DAO withdrew $732 million worth of Bitcoin from its reserves. People fear that this could be a sign of the similar events leading to Terra’s UST collapse.

Justin Sun Addresses USDD Fears

The Tron DAO, which manages the USDD stablecoin reserves, sparked fears among investors on Wednesday by withdrawing 12,000 Bitcoin worth of $732 million, without a DAO vote. This raised doubts about USDD’s decentralisation and prompted comparisons to Terra’s UST stablecoin collapse in 2022.  

USDD, launched in 2022 as an alternative to UST, is backed by multiple assets in the Tron reserve and is overseen by the network’s DAO. However, the lack of DAO involvement in key decisions has led users to question the network’s decentralised governance.  

Justin Sun, Tron’s founder, addressed investors’ concerns on X, explaining that the Bitcoin withdrawal was due to USDD’s collateralisation rate exceeding the system threshold of 300%, which he deemed inefficient. Sun also mentioned that this action was part of a plan to safeguard the asset from future threats and hinted at upcoming upgrades for the stablecoin.

Regarding the decentralized stablecoin USDD, its mechanism is similar to MakerDAO’s DAI and is not mysterious. When your collateral exceeds the amount specified by the system (usually between 120%-150% depending on the vault), any collateral holder can withdraw any amount freely…

— H.E. Justin Sun 孙宇晨(hiring) (@justinsuntron) August 22, 2024

Meanwhile, Tron’s meme coin generator, SunPump, continues to perform well, surpassing its competitor Pump.fun in daily revenue by reaching $560K compared to Pump.fun’s $368K. SunPump also launched 7,352 new meme tokens in the last 24 hours, outperforming Pump.fun’s 5,694, according to Dune Analytics data.  

Tron’s native token, TRX, has risen nearly 2% over the past 24 hours.

Tags: Altcoin NewsFeature
John Hobbs

John Hobbs

John Hobbs serves as the co-Leader of the Coin Culture tokens and data team for Australia site, specialising in crypto derivatives, DeFi, market microstructure, and protocol analysis. John possesses a cryptocurrency portfolio including assets such as YFI, SHIB, DOGE, USDT, MATIC, MANA, GLMR, LINK and XMR. Additionally, he contributes over $5,000 to liquidity pools across various platforms including Compound, Curve, SushiSwap and PancakeSwap. John has a professional background in finance and data analysis, with over five years of experience as a crypto investor.

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