USDD decoupled in the past week! Stablecoin reserves lost $500 million in a day, with a remaining collateral rate of only 65%.

Since the FTX incident, the stablecoin USDD on TRON has gradually decoupled, with the lowest price dropping to $0.968. At the same time, the proportion of USDD stablecoin pool on Curve is severely skewed, with USDD accounting for nearly 80%. Upon observing the data, it was found that the collateralization ratio of USDD has dropped significantly, with an actual collateralization ratio of only 65%.

Significant Decrease in USDD Reserve Assets

According to a Twitter post by Lookonchain, on 11/10, USDD had a reserve of 990 million USDC, but a few days later, the USDC reserve dropped by over 55%, leaving only around 442 million USDC.

After investigation, Lookonchain discovered that the reduced 548 million USD was transferred to three different addresses:

1. TGfWKtSDs96TrX1GwH3xsf5HxZhj1PPydv
2. TUjx6w55Nx9G4GjjRNEB4e7w5BUH3WmJTZ
3. TJkgTCg91dEfsT9to74VDXi7uUxRDqF2ft

The first two addresses received a total of 350 million USDC, which was used to repay loans on the lending protocol JustLend.

The last address received 200 million USD, all of which was transferred to Binance's hot wallet.

USDD Liquid Asset Collateralization Rate is Only 65%

Upon closer examination of the remaining 442 million USDC reserve, it was found that all of it was stored on the lending protocol JustLend.

However, most of the liquidity cannot be immediately withdrawn due to loans, with only 144 million USDC representing actual immediate liquidity.

Under these circumstances, the actual reserves of USDD consist of 144 million USDC, approximately 235 million USD worth of BTC, and a large amount of TRX that requires significant discounts.

Regarding TRX, the official calculation includes previously burned TRX used to mint USDD into reserves, without sufficient explanation from the official sources. While USDD can be burned for TRX, if the consensus price of TRX declines, it could lead to a death spiral, similar to past experiences with LUNA and UST. Therefore, a more reasonable inclusion in reserves would be the actual held 1.8 billion TRX, approximately 96 million USD, and not the 10.9 billion TRX as shown on the official website.

Thus, the current reserve assets of USDD amount to 144 million USD in USDC, 235 million USD in BTC, and 96 million USD in TRX, totaling 725 million USD divided by the issuance value of USDD. It is evident that the actual collateralization rate is only about 65%. If a more stringent calculation method is used, considering only USDC without volatile assets as reserves, then the collateralization rate of USDD is only 20%.

This is why Lookonchain issued a warning on Twitter, indicating that the ratio on Curve, the unpegging phenomenon, and the collateralization rate all suggest that USDD price could face a significant decline. According to Coinmarketcap data at the time of writing, the USDD price was 0.986 USD, and the unpegging phenomenon has persisted for nearly a week.