Since its debut, USDD stablecoin on the Tron blockchain has always been shady. While UST by Terra was promising 20% APR for your investment by using LUNA, Tron team decided to take this one step further by promising 30% APR which was too obscure to collapse.
As crypto ecosystem has been losing blood, we witnessed historical events due to the negative conditions + financial mistakes made by centralized service providers. The collapse of FTX gave birth to more trouble in crypto.
For stablecoins, it is a stress-test time as they have to own 1:1 ratio to stay at the peg levels. Unfortunately, was the majority of coins are not backed by their reserves. USDD, though it still claims that the collateral ratio is 207%, it is far from being realistic.
Do you want to see the real situation of USDD Reserves?
Check tdr.org to learn more about it.
Here is the total supply of USDD:
As you know, the stablecoins either keep USD in their bank accounts to prove their reserves or some algorithmic stablecoins keep some centralized stablecoins, like USDC reserve of DAI, to prove that each 1 USD worth of Stablecoin is backed by USD in the real world.
The reserves section claim that it is backed by multiple mainstream cryptocurrencies. Yet, we only have 4 USDT, 442,323 USDC and 14,040 BTC in the reserves.
In Reality:
$233835,20 Bitcoin
$442,323 USDC
$4 USDT = $676,162 in reserves with "mainstream" cryptocurrencies.
Unfortunately, the rest of the reserve is in Tron cryptocurrency. When we come back to their statement, they are getting the calculation of 207% collateralization rate not with stablecoins or mainstream crypto but with their Tron bag.
If I had provided 5 USDT to the system, I can only get 4 USDT while the rate is 0 for the other stablecoins!
Check the Twitter thread by Lookonchain in which s/he shares incredible on-chain data over the corrupted reserve system of USDD.
Unfortunately, Tron is close to be the next undercollateralized stablecoin that will ruin the whole financial markets built upon it. Trusting to Tron reserves of USDD is not different from LUNA reserves.
To be honest, a bomb with a timer has been planted in the side of USDD. It may not explode today or tomorrow, but we all know that it is inevitable in crypto which has "smart money" people who are waiting for the best time to hunt such projects down.
Remember the fact that when millions of dollars lost by the majority of people, some others made millions with their short positions. De-Fi projects have no open door to be shady anymore. It's just a matter of FUD and shorts to lose $14B wealth in 2 days 馃槈
