Justin Sun Calms Fears After $729M Bitcoin Exit from USDD

Tron founder Justin Sun says there’s no need to worry after someone removed 12,000 Bitcoin that backed Decentralized USD, a stablecoin run by the Tron DAO Reserve. On August 19, blockchain tracker Blockchair showed that 12,000 Bitcoin, worth over $729 million, left an address that held collateral for Decentralized USD (USDD).

Some people on X think Sun moved the Bitcoin himself. Others are concerned that someone took the Bitcoin without the TRON DAO Reserve voting. The DAO’s website shows that they voted once, in May 2023, about using burned Tron tokens.

Sun responded on X on August 22. He said USDD works like MakerDAO’s DAI, allowing people to take out extra collateral without approval. “This is basic DeFi stuff,” Sun claimed. “Currently, USDD has over 300% collateral, which isn’t very efficient.” He added, “USDD isn’t mysterious. It works a lot like DAI.”

Source: Justin Sun

USDD’s transparency page no longer shows the Bitcoin address. Instead, it indicates that Tether and TRX mainly back USDD. Currently, about 744 million USD are in use. The transparency page lists $1.7 billion of TRX and USDT backing it. This means USDD has 230% collateral.

USDD’s Bitcoin Shift Sparks Stability Concerns

USDD has more assets than the stablecoins it has issued. Dai has 120% collateral for comparison, while USDT and USDC have 100%. USDD started in 2022 to compete with Terra’s UST token, which no longer exists. Like USDC and USDT, USDD aims to be worth one US dollar.

However, USDD’s value has changed at times. On March 11, 2023, it dropped to $0.92, its lowest ever, according to CoinMarketCap. Despite Sun’s reassurances, some crypto watchers remain skeptical. They question why such a large amount of Bitcoin was moved without a clear explanation or community vote. Others wonder if this signals a shift in UDD’s backing strategy.

As the crypto world watches closely, the long-term impact of this move on UDD’s stability and user trust remains to be seen.

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