Real Estate-Backed Stablecoin USDR Loses Peg to USD Due to Redemptions
The real estate-backed stablecoin USDR has lost its peg to the U.S. dollar after experiencing a rush of redemptions that drained its liquid assets, including Dai (DAI), from its treasury. USDR is issued by Tangible protocol, a decentralized finance project that aims to tokenize real-world assets like housing. The majority of USDR trading occurs on the Pearl decentralized exchange (DEX) on the Polygon network.
Liquidation of DAI Leads to Depegging
Tangible explained in a tweet that all of the liquid DAI from the USDR treasury was redeemed within a short period of time, causing an accelerated drawdown in the market cap. The lack of DAI for redemptions combined with panic selling resulted in the depegging of USDR.
Price Drops and Developer Response
As a result of the flood of selling, USDR’s price dropped to as low as $0.5040 per coin before recovering slightly to around $0.53. Despite losing nearly 50% of its value, the project’s developers assured users that it was merely a liquidity issue affecting redemptions and pledged to provide solutions.
Treasury Loss but Assets Still Valuable
Although the treasury experienced a loss, the official website of the USDR app stated that its assets are still worth more than the entire market cap of the coin. A significant portion (14.74%) of USDR’s collateral consists of Tangible (TNGBL) tokens, while the remaining 85.26% is backed by real-world housing and an insurance fund.
Stablecoin Pegs Under Extreme Market Conditions
Stablecoins are designed to maintain a value of $1 on the open market. However, they can sometimes lose their peg during extreme market conditions. For example, Circle’s USDC fell to $0.885 per coin when multiple U.S. banks went bankrupt but later regained its peg. Terra’s UST lost its peg in May and has not recovered, currently valued at $0.01 per coin.
Hot Take: USDR Faces Depegging Amidst Liquidity Issue
The real estate-backed stablecoin USDR has suffered a depegging from the U.S. dollar due to a liquidity issue caused by a rush of redemptions and panic selling. Despite the significant drop in value, the project’s developers remain committed to finding solutions and assure users that the real estate and digital assets backing USDR still exist to support redemptions. Stablecoins like USDR are designed to maintain a peg to the U.S. dollar, but extreme market conditions can lead to deviations from this peg. The loss of the peg highlights the challenges faced by stablecoins in maintaining stability in volatile markets.
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