- TRON DAO withdraws a significant amount of BTC from its USDD reserves, transferring it to HTX.
- Over 98% of USDD’s collateral is backed by TRX, giving it a robust collateralization ratio exceeding 300%.
- Due to inefficient capital utilization, TRON DAO is considering future upgrades to USDD to enhance its competitiveness.
TRON DAO is in the limelight after withdrawing approximately 12,000 BTC from the reserves backing its decentralized stablecoin, USDD. These funds, valued at several hundred million dollars, were transferred to HTX, formerly known as Huobi Global. This significant movement in assets comes as the Tron ecosystem continues to strengthen its foothold in the stablecoin market.
According to data from Arkham Intelligence, the total supply of USDD currently stands at around 745 million, with a collateral value of $1.723 billion. Notably, close to 98.8% of this collateral is backed by 10.93 million TRX, equivalent to $1.703 billion. This leaves USDD with a robust collateralization ratio exceeding 300%, a figure that has sparked discussion regarding the efficiency of capital utilization within the system.
The uproar over the transfer caught the attention of TRON founder Justin Sun who commented on the situation. Sun shed light on the decentralized nature of USDD explaining that when the collateral exceeds the amount specified by the system, (usually between 120%-150% depending on the vault), any collateral holder is free to withdraw without needing approval. This mechanism is designed to mirror the principles of other decentralized stablecoins, such as MakerDAO’s DAI, where collateral levels determine the ability to withdraw or the need to top up to avoid liquidation.
If the collateral falls below a certain level (typically under 110%), it needs to be topped up; otherwise, the collateral may trigger liquidation. This is part of the basics of DeFi 101.
TRON DAO Revamping USDD to Stay Ahead- Sun
Sun emphasized that USDD’s long-term collateralization rate, which consistently exceeds 300%, indicates that the capital is not being used efficiently. This has prompted the TRON DAO Reserve to consider upgrades to USDD in the future. The goal of these upgrades is to enhance USDD’s competitiveness in the growing decentralized stablecoin market.
In his statement, Sun also highlighted Tron’s broader role in the stablecoin sector, describing the network as a “kingdom of stablecoins.” As Tron continues to evolve and adapt its offerings, the planned improvements to USDD are expected to bolster its position in the market, making it a more efficient and competitive decentralized stablecoin option for users.
