Justin Sun's USDD Stablecoin Is No Longer Backed By BTC

On Wednesday, the Tron DAO Reserve removed nearly $750 million worth of BTC backing USDD – the algorithmic stablecoin launched by Justin Sun in 2022 as a competitor to Terra’s now defunct UST token.

Many criticised this move, with one user noting that USDD was now 100% backed by TRX except for $20M of USDT. However, Justin Sun attempted to downplay concerns by stating that the withdrawal of BTC was “part of the basics of DeFi 101.”

He argued that any collateral holder could withdraw any amount freely without anyone's approval as long as the remaining collateral exceeded the amount specified by the system (usually between 120%-150% depending on the vault).

He argued that USDD’s long-term collateralization rate exceeded 300% and that its capital utilization was not very efficient.

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