Tron founder Justin Sun has downplayed concerns following the recent removal of 12,000 Bitcoin, valued at over $729 million, from the reserves backing the Decentralized USD (USDD), a stablecoin governed by the Tron DAO Reserve.
Blockchain data from Blockchair reveals that on August 19, the Bitcoin was transferred from an address previously listed as holding part of the collateral for USDD. The move has sparked discussions on X, with some users speculating that Sun himself initiated the transfer, while others raised concerns that the Bitcoin was removed without a community vote by the TRON DAO Reserve.
The last and only governance vote on the TRON DAO Reserve’s page dates back to May 2023, when the community voted on the use of burned Tron tokens.
In a statement on August 22, Sun addressed the concerns, stating that USDD’s operational mechanism is similar to that of MakerDAO’s DAI, where a collateral holder can withdraw assets without needing prior approval, provided that the collateral exceeds the amount specified by the system.
"This is part of the basics of DeFi 101. Currently, USDD has a long-term collateralization rate exceeding 300%, which means that the capital utilization is not very efficient.”
Sun explained.
Regarding USDD, Sun reiterated,
“Its mechanism is similar to MakerDAO’s DAI and is not mysterious.”
Following the Bitcoin transfer, the USDD transparency page was updated to reflect that the stablecoin is now primarily backed by Tether (USDT) and TRX, with Bitcoin no longer listed as collateral. As of now, over 744 million USDD are in circulation, backed by $1.7 billion worth of TRX and USDT, giving the stablecoin a collateralization ratio of over 230%.
USDD was launched in 2022 as a rival to Terra’s now-defunct TerraUSD (UST) token, with its value intended to be pegged to the US dollar. Despite this, the stablecoin has experienced volatility, reaching a low of $0.92 on March 11, 2023, according to CoinMarketCap.
