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.
