Real estate-backed stablecoin USDR has de-pegged from its $1.00 target, triggering concerns among crypto investors and analysts.
According to reports, the stablecoin’s treasury has been depleted of its liquid assets, leading to a sudden loss of confidence in the coin’s ability to maintain its peg. The de-pegging of USDR is likely to have ripple effects throughout the crypto industry, with some analysts warning of a broader market sell-off.
Within hours of its treasury being drained of DAI, the Polygon-based stablecoin USDR, backed by real estate holdings, plummeted in value to nearly $0.51.
According to data from Tangible DAO, the entity behind USDR, the stablecoin’s treasury currently holds zero DAI, and only $6.2 million in insurance funds. This indicates that the USDR is under-collateralized, and might struggle to maintain its peg if there is a sudden demand for redemption.
USDR treasury is also backed by the TNGBL token. However, market data from CoinGecko shows that it’ll be difficult to liquidate large amounts of USDR, seeing that its total 24-hour trading volume is less than $300,000 with a bid depth of less than $5,000 on UniSwap.
According to Polygon Block Explorer, USDR is trading for pennies on the dollar on decentralized exchanges. The USDR website states that the token offers a 16% yield, which may attract traders despite the risks of low liquidity. The discrepancy between the project’s stated yield and its trading price may indicate a lack of confidence in the project.
A user took to his X (formerly Twitter) account, stating that $USDR is currently trading at $0.9 after the $DAI reserves got depleted. Mihov hinted about a potential depeg a few weeks ago.
Another user posted a tweet on X (formerly Twitter) concerning USDR holders experiencing a major loss of funds. He stated “Someone swapped 130,000 $USDR for 0.0001 $USDC” following the depeg.
The USDR stablecoin’s de-pegging incident is one of many that highlight the rise of risk in the crypto industry and the importance of thoroughly investigating any stablecoin before investing, due to factors such as sustainability.
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