The USDD stablecoin, issued by the TRON DAO Reserve, has undergone a significant shift in its backing. The removal of 12,000 BTC, worth approximately $726 million, from its collateral address has left USDD primarily backed by TRX, the native token of the Tron blockchain. This unexpected move, spotted on social media platform X, occurred without an official announcement from the TRON DAO.
Tron founder Justin Sun responded to the developments, stating that the withdrawal of collateral is not mysterious and that any holder can withdraw funds freely, comparing the process to MakerDAO. Sun acknowledged that USDD was not capital efficient and mentioned plans to upgrade the stablecoin to make it more competitive in the decentralized market. However, he did not clarify whether the TRON DAO was involved in the Bitcoin withdrawal.
Originally launched as an algorithmic stablecoin similar to Terra’s ill-fated UST, USDD later transitioned to a hybrid model, backed by assets like Bitcoin, TRX, USDT, and USDC. The stablecoin, pegged to the U.S. dollar, currently holds a market cap of around $744 million, placing it just within the top 100 cryptocurrencies by market cap.
As USDD shifts its reliance to TRX, concerns arise over its future stability, given TRX’s volatility despite its recent surge. TRX, currently trading at $0.15, has seen a significant increase in value, doubling over the past year. The Tron ecosystem has also gained traction, recently overtaking Solana to become the second-largest blockchain by total value locked (TVL), with $8.2 billion across various decentralized finance (DeFi) protocols.