The project team revealed that the real estate-backed stablecoin USDR lost its peg to the US dollar after a wave of redemptions drained liquid assets such as Dai (DAI) from its treasury.
USDR — backed by a mix of cryptocurrencies and real estate holdings — is issued under the Tangible Protocol, a decentralized finance project that seeks to tokenize housing and other real-world assets.
USDR is mostly traded on the Pearl decentralized exchange (DEX), which runs on Polygon.
Update on $ US dollars
This leads to an accelerated drawdown in market value.
Coupled with the lack of DAI for redemptions, panic selling ensued, causing the peg to be cancelled.
We are working on…
— Tangible (@tangibleDAO) October 11, 2023
In a tweet dated October 11, concrete to explain Within a short period of time, all liquid DAI funds were redeemed from the US dollar treasury, resulting in a rapid decline in market value, adding:
“In addition to the lack of DAI for redemptions, panic selling ensued, causing the currency to be unpegged.”
The US Dollar (USDR) saw a torrent of selling at around 11:30 AM UTC, sending its price down to US$0.5040 per coin. It rebounded slightly to around $0.53 shortly after.
Despite the coin losing nearly 50% of its value, the project’s developers have pledged to provide “solutions” to the problem, saying it is merely a liquidity issue that temporarily challenges recoveries.
“This is a liquidity issue,” they said advertiser. “The real estate and digital assets backing USDR still exist and will be used to support redemptions.”
Despite this loss to the treasury, the official website of the application advertiser on October 11 at 9:57 PM UTC that its assets were still worth more than the full market value of the coin.
14.74% of USDR collateral consists of tokens (TNGBL), which are part of the coin’s native ecosystem. The team claims that the remaining 85.26% is guaranteed through real housing and an “insurance fund.”
Related: Insurance and real estate: How asset tokenization is reshaping the status quo
Stablecoins are intended to always be worth $1 on the open market. But it sometimes loses its peg under extreme market conditions.
Circle’s USDC (USDC), the sixth-largest cryptocurrency by market cap as of October 11, fell to $0.885 per coin on March 11 when several US banks went bankrupt, but regained its peg on March 14. in May and they never recovered. that it value At $0.01 per coin as of October 11, according to data from Coinmarketcap.