Justin Sun’s USDD stablecoin, issued by the TRON DAO Reserve, has experienced a significant shift in its backing. The stablecoin has lost its Bitcoin collateral, as 12,000 BTC (worth approximately $726 million) was removed from its listed collateral address. As a result, the primary backing for USDD now comes from TRX, the native token of the Tron blockchain.
Notably, this change was made without any official action by the TRON DAO. Justin Sun, the founder of Tron, responded to reports of the shift by stating that the withdrawal of collateral is allowed without approval from anyone. He likened this operation to that of MakerDAO, explaining that any collateral holder can freely withdraw any amount they desire.
Sun acknowledged that USDD was not capital efficient, highlighting its “long-term collateralization rate” of over 300%. He also mentioned that the TRON DAO Reserve plans to upgrade USDD in the future, aiming to make it a more competitive decentralized stablecoin in the market. However, it remains unclear whether the supposedly decentralized organization was involved in this collateral change.
Originally, USDD was an algorithmic stablecoin similar to Terra’s UST. However, following the collapse of Terra’s stablecoin in May 2022, USDD transitioned into a hybrid model backed by various collateral, including Bitcoin, TRX, USDT, and USDC.
Despite losing its Bitcoin backing, USDD currently has a market cap of around $744 million and remains among the top 100 cryptocurrencies by market cap. However, it has recently been surpassed by PYUSD, a stablecoin introduced by PayPal.
TRX, now serving as the primary backing for USDD, is known for its volatility and currently holds a top 10 spot among cryptocurrencies (excluding stablecoins). With a market price of $0.15, TRX has experienced significant growth in recent weeks, as Tron and Justin Sun have embraced its use as a memecoin marketplace. Its market cap stands at $13.5 billion.
Additionally, the Tron ecosystem has recently surpassed Solana to become the second-largest blockchain by TVL (total value locked) in decentralized finance (DeFi), boasting over $8.2 billion across more than 30 different DeFi protocols, according to data from DeFi Llama.