Originally published on: August 23, 2024
**Introduction:**
Tron founder Justin Sun addresses concerns surrounding the removal of 12,000 Bitcoin used as collateral for USDD, a stablecoin under the governance of the Tron DAO Reserve. Let’s delve into the insights and implications of this move.
**The USDD Bitcoin Removal Controversy:**
Recently, 12,000 Bitcoin worth over $729 million was withdrawn from an address backing USDD, sparking debates within the cryptocurrency community. Allegations arose, with some pointing fingers at Sun himself for the transfer, while others questioned the lack of a community vote from the Tron DAO Reserve.
**Justin Sun’s Response and DeFi Principles:**
In response to these concerns, Justin Sun emphasized that the mechanism behind USDD mirrors that of MakerDAO’s Dai, allowing for collateral holders to withdraw without prior approval if certain stipulated criteria are met. Sun likened this move to a fundamental aspect of DeFi, stating, “This is part of the basics of DeFi 101.”
**Transparency and Assets in Reserves:**
USDD’s transparency page no longer includes Bitcoin as collateral post its recent withdrawal. It reveals over 744 million USDD tokens in circulation, with reserves comprising $1.7 billion worth of TRX and USDT, ensuring a collateralized ratio exceeding 230%. This robust collateralization sets USDD apart from other stablecoins such as DAI, USDT, and USDC.
**The Competitive Landscape and Value Fluctuations:**
Launched in 2022 as a contender against TerraUSD (UST), USDD aims to maintain a stable value pegged to the US dollar. However, it encountered volatility, dropping to an all-time low of $0.92 on March 11, 2023. As the crypto market evolves, the stability and resilience of USDD will remain under scrutiny.
**Conclusion:**
As the crypto space navigates through shifts and controversies, the rationale behind key decisions, such as the removal of Bitcoin from USDD, underscores the principles of decentralized finance. Justin Sun’s insights shed light on the intricacies of DeFi mechanisms and their implications on stablecoin governance. The evolving landscape of stablecoins and their collateralization ratios will continue to shape the future of digital finance.
