In a recent turn of events, Real USD (USDR), a Polygon-based stablecoin backed by real estate holdings, witnessed a significant depreciation in its value, dropping nearly 50% within a few hours.
This sudden devaluation was primarily attributed to the rapid redemption of all the liquid DAI from the USDR treasury, leading to a sharp decline in its market capitalization. The lack of DAI available for redemptions further exacerbated the situation, resulting in panic selling and a subsequent depegging of the stablecoin.
Developed by TangibleDAO, USDR is a unique stablecoin in the crypto market, with its value accrual system integrated into its design. Unlike other digital currencies, USDR operates on the Polygon blockchain and is collateralized by yield-producing real estate assets. However, the recent depletion of its DAI reserves, which are typically redeemable at a 1:1 ratio with USDR, has raised alarms about its stability and the underlying risks associated with such assets.
The exact reasons behind the rapid depletion of DAI reserves remain a subject of speculation. However, the immediate aftermath saw the stablecoin’s value plummet to as low as $0.51. On-chain data further revealed that the stablecoin’s price was hovering around $0.53, with a market cap of $45 million and a circulating supply of 45.21 million. The stablecoin also offered a yield of 16.39%.
The current financial structure of USDR paints a concerning picture. While the stablecoin boasts of a market cap of $45 million, only $5.9 million worth of liquid assets are available in the form of an insurance fund. Additionally, around $6.6 million is held in the TNGBL token, which itself has lost 53% of its value in the last 24 hours. This situation has led traders to offload large quantities of USDR in exchange for USDC, often at a fraction of its original value.
Further complicating matters, USDR’s dashboard indicates that some of the stablecoin is backed by itself, a practice that has raised eyebrows in the crypto community. This self-collateralization, where 62,810 USDR is listed as collateral for the stablecoin, poses significant risks and questions the stability of the asset.
Crypto trader Valentin Mihov had previously warned users about the potential risks associated with USDR, labeling it a “ticking time bomb.” His concerns revolved around the possibility of a “death spiral” if the DAI reserves were to be exhausted. His words now seem prophetic as the stablecoin faces one of its most challenging periods.
In light of these events, TangibleDAO has emphasized that the current situation is primarily a liquidity issue. They assure that the real estate and digital assets backing USDR still exist and will be utilized to support redemptions.