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Justin Sun Dismisses Concerns Over 12K Bitcoin Withdrawal from USDD Reserves as Routine DeFi Practice

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.


Justin Sun discussing the removal of Bitcoin from USDD reserves, emphasizing its alignment with decentralized finance principles.
Justin Sun addresses concerns over the withdrawal of 12,000 Bitcoin from USDD's reserves, labeling it a routine DeFi operation.

Key Points:


  1. 12,000 Bitcoin Removed: On August 19, 12,000 Bitcoin, worth over $729 million, was withdrawn from the reserves backing USDD, sparking concerns due to the lack of a DAO vote.


  2. 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."


  3. 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.


  4. 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.


  5. 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.


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