Polygon-Based mostly Stablecoin USDR Faces Extreme Depreciation Amidst DAI Reserve Depletion

In a current flip of occasions, Actual USD (USDR), a Polygon MATIC 0.66%-based stablecoin backed by actual property holdings, witnessed a major depreciation in its worth, dropping practically 50% inside just a few hours.

This sudden devaluation was primarily attributed to the fast redemption of all of the liquid DAI from the USDR treasury, resulting in a pointy decline in its market capitalization. The shortage of DAI obtainable for redemptions additional exacerbated the scenario, leading to panic promoting and a subsequent depegging of the stablecoin.

Developed by TangibleDAO, USDR is a singular stablecoin within the crypto market, with its worth accrual system built-in into its design. Not like different digital currencies, USDR operates on the Polygon blockchain and is collateralized by yield-producing actual property property. Nonetheless, the current depletion of its DAI reserves, that are usually redeemable at a 1:1 ratio with USDR, has raised alarms about its stability and the underlying dangers related to such property.

The precise causes behind the fast depletion of DAI reserves stay a topic of hypothesis. Nonetheless, the speedy aftermath noticed the stablecoin’s worth plummet to as little as $0.51. On-chain information additional revealed that the stablecoin’s value was hovering round $0.53, with a market cap of $45 million and a circulating provide of 45.21 million. The stablecoin additionally provided a yield of 16.39%.

The present monetary construction of USDR paints a regarding image. Whereas the stablecoin boasts of a market cap of $45 million, solely $5.9 million price of liquid property can be found within the type of an insurance coverage fund. Moreover, round $6.6 million is held within the TNGBL token, which itself has misplaced 53% of its worth within the final 24 hours. This example has led merchants to dump giant portions of USDR in change for USDC, typically at a fraction of its authentic worth.

Additional complicating issues, USDR’s dashboard signifies that a few of the stablecoin is backed by itself, a observe that has raised eyebrows within the crypto neighborhood. This self-collateralization, the place 62,810 USDR is listed as collateral for the stablecoin, poses important dangers and questions the steadiness of the asset.

Crypto dealer Valentin Mihov had beforehand warned customers in regards to the potential dangers related to USDR, labeling it a “ticking time bomb.” His issues revolved round the potential for a “loss of life spiral” if the DAI reserves had been to be exhausted. His phrases now appear prophetic because the stablecoin faces considered one of its most difficult intervals.

In gentle of those occasions, TangibleDAO has emphasised that the present scenario is primarily a liquidity subject. They guarantee that the actual property and digital property backing USDR nonetheless exist and will likely be utilized to help redemptions.