The USDD stablecoin, issued by the TRON DAO Reserve, has experienced a significant change in its backing. A staggering 12,000 BTC was removed from its formerly listed collateral address, which was valued at around $726 million. As a result, USDD is now primarily backed by TRX, the native token of the Tron blockchain.
This move was observed on X on Tuesday and was executed without any apparent official action by the TRON DAO. Tron founder Justin Sun addressed the shift on X (Twitter), stating that the situation is “not mysterious.”
Sun clarified that any collateral holder has the freedom to withdraw any amount without requiring approval from others, drawing a parallel to MakerDAO’s operations. He highlighted that USDD was not capital efficient, with a long-term collateralization rate exceeding 300%.
In response to the reports, Sun revealed that the TRON DAO Reserve has plans to enhance USDD in the future to make it a more competitive decentralized stablecoin. However, it was not specified whether the decentralized organization was directly involved in the recent alterations.
Originally, USDD functioned as an algorithmic stablecoin, akin to Terra’s UST. Following the collapse of UST in May 2022, USDD transitioned into a hybrid model backed by various collateral assets, including Bitcoin, TRX, USDT, and USDC.
As per CoinGecko data, the market cap of USDD, pegged to the U.S. dollar, stands at approximately $744 million. It maintains its position among the top 100 cryptocurrencies by market cap, ranked 96th, though it was recently overtaken by PYUSD, a new stablecoin introduced by PayPal.
With TRX serving as its primary backing now, USDD faces increased volatility. TRX, currently trading at $0.15, has seen a surge in value in recent weeks as Tron and Sun actively promote it as a memecoin marketplace.
TRX has more than doubled its value from a year ago and boasts a market cap of $13.5 billion.
Recently, the Tron ecosystem surpassed Solana to become the second-largest blockchain by TVL (total value locked), with over $8.2 billion across more than 30 different decentralized finance (DeFi) protocols, as reported by DeFi Llama.
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As we conclude this analysis of the USDD stablecoin and its transition to primarily relying on TRX for backing, the cryptocurrency world continues to witness rapid changes and innovations. Keep yourself updated with the latest trends and news in the decentralized finance space by visiting DeFi Daily News. Stay informed and stay ahead in the exciting realm of cryptocurrency!
