The removal of 12,000 BTC—worth approximately $726 million—from its collateral address has left USDD primarily reliant on TRX.
TRX is the native token of the Tron blockchain. Let’s discover more about USDD.
USDD Shifts from Bitcoin to TRX Backing
This development was noticed on X (formerly Twitter) on Tuesday, without any prior official announcement from the TRON DAO. This raised questions about the stability and transparency of the stablecoin.
Tron founder Justin Sun responded to these reports by downplaying the significance of the change. He stated on X that there is “nothing mysterious” about the move. He explained that any collateral holder has the freedom to withdraw funds without needing approval.
Source: X
He acknowledged that USDD was not capital-efficient and had maintained a “long-term collateralization rate” of over 300%. Sun also mentioned that the TRON DAO Reserve plans to upgrade USDD to make it more competitive in the decentralized stablecoin market.
More About USDD
However, Sun’s comments did not clarify whether the TRON DAO was involved in the decision to remove Bitcoin backing or if the move was made by individual collateral holders. This has led to further speculation about the role and influence of the supposedly decentralized organization in managing USDD’s collateral.
Source: X
USDD was initially launched as an algorithmic stablecoin, similar to Terra’s UST, which collapsed dramatically in May 2022. Following that event, USDD transitioned to a hybrid model, being backed by a mix of assets including Bitcoin, TRX, USDT, and USDC. The recent withdrawal of Bitcoin backing marks another significant shift in its collateral strategy.
Source: X
Despite these changes, this stablecoin continues to hold its peg to the U.S. dollar, with a market cap of around $745 million, according to CoinGecko. It remains within the top 100 cryptocurrencies by market cap, though it has recently been overtaken by PYUSD, PayPal’s new stablecoin.
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