1 year ago
TangibleDAO volition discontinue its existent estate-backed USDR stablecoin stablecoin task aft it depegged connected Oct. 11.
In an Oct. 12 post connected X (formerly Twitter), the task said the stablecoin has excessively galore onslaught vectors successful its design, and measures designed to support its users were easy manipulated.
“We tin support our users astatine the existent size, but arsenic we continued scaling, it whitethorn person go impossible,” the TangibleDAO said. “We’ve ever done our champion to support our assemblage and investors. In this case, it’s unwinding USDR for the amended good.”
Due to this, the squad volition deprecate the stablecoin erstwhile it completes the redemption process to compensate users. The process involves the utilization of its Protocol Owned Liquidity (POL) and Insurance Fund Assets. It besides entails introducing a tradable Basket containing tokenized existent property assets.
TangibleDAO further noted that it would liquidate its existent property assets arsenic a backup program successful lawsuit the Basket redemption strategy encounters difficulties.
Why did USDR depeg?
USDR fell from its $1 peg due to the fact that its treasury utilized illiquid assets, specified arsenic existent estate, to backmost the stablecoin, according to Tom Wan, a researcher astatine 21Shares.
Wan said the instability arose due to the fact that TangibleDAO couldn’t conscionable its users’ redemption demands for USDR contempt the plus being afloat backed by the DAI stablecoin and existent estate.
The stablecoin experienced a important question of redemptions that depleted the DAI liquidity successful its treasury connected Oct. 11. With lone illiquid existent property near to backmost the stablecoin, TangibleDAO couldn’t fulfill idiosyncratic requests, starring to a panic-driven sell-off and the consequent de-pegging of the asset.
Wan continued that the treasury’s inability to conscionable redemption demands could beryllium attributed to the illiquid quality of its existent property assets. These existent property assets were tokenized successful ERC-721 alternatively than ERC-20, making fractionalization and trading challenging.
He emphasized 2 important takeaways from this situation. First, a liquid plus indispensable not trust connected an illiquid 1 for backing. Second, to heighten tradability, tokenizing illiquid assets utilizing the ERC-20 modular is essential.
The station Depeg situation of existent estate-backed USDR stablecoin deemed terminal arsenic protecting users ‘impossible’ appeared archetypal connected CryptoSlate.
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