Justin Sun downplays concerns after 12,000 Bitcoin was removed from USDD’s reserves without a DAO vote, calling it a standard DeFi practice with USDD still over-collateralized.
Tron founder Justin Sun has downplayed concerns following the removal of 12,000 Bitcoin from the reserves backing Decentralized USD (USDD), a stablecoin governed by the Tron DAO Reserve. The move, which occurred without a DAO vote, has raised eyebrows in the crypto community. However, Sun insists this action is a routine part of decentralized finance (DeFi) and does not undermine USDD's stability.
Key Points:
12,000 Bitcoin Removed: On August 19, 12,000 Bitcoin, worth over $729 million, was withdrawn from the reserves backing USDD, sparking concerns due to the lack of a DAO vote.
Justin Sun's Response: Sun explained that the removal aligns with DeFi principles, allowing for collateral adjustments without approval if the collateral exceeds a certain threshold, a process he calls "DeFi 101."
Current Collateralization: Despite the Bitcoin withdrawal, USDD remains highly collateralized, with a ratio of over 230%, primarily backed by Tether (USDT) and TRON (TRX) tokens.
Comparison with Other Stablecoins: USDD's collateralization rate is higher than that of other stablecoins like DAI, USDT, and USDC, which are collateralized at 120% and 100%, respectively.
Transparency Updates: USDD’s transparency page has been updated to reflect the change, now showing reserves of TRX and USDT instead of Bitcoin.
While the removal of 12,000 Bitcoin from USDD's reserves without a DAO vote has raised concerns, Justin Sun maintains that the move is a standard DeFi practice aimed at optimizing capital efficiency. With USDD remaining over-collateralized, the stablecoin's stability appears secure, although the incident highlights ongoing debates about governance and transparency in decentralized finance.
Source: Cointelegraph
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