In a recent development, USDD, a stablecoin on the Tron network, removed roughly 12,000 Bitcoin (BTC) from its collateral. This was done without the consent of the TRON DAO Reserve, the governing body of the coin. This has raised questions concerning the accountability of USDD.
USDD Collateral Management Raises Concerns
Contrary to the decentralization claim, USDD functions with little or no contribution from the supposed governing body. The stablecoin, marketed as a decentralized project, cannot be traced to have had a governance vote that reflects the recent change in collateral. This is important because the DAO had only had one other vote in its history up to this point.
Also, the coin’s governance should be more robust. One vote was taken in May 2023 related to the usage of ‘burned’ TRX for stablecoin activities. This decision and the recent unauthorized removal of BTC indicate a lack of understanding of the basic governance terms in USDD.
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The need for more transparency remains a problem. The USDD transparency page has removed the wallet that once held 12,000 BTC from the list, making it unclear how the coin’s collateral is managed.
However, USDD also has problems that are not related to governance. The stablecoin has a total supply of around $744 million, ranking it among the largest stablecoins, such as TrueUSD and Tether Gold. However, its collateral management could have been more suboptimal in some ways, with large amounts held at HTX without DAO approval.
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The Peg Stability Module, used to exchange with other stablecoins, is almost empty. It has $19 million USDT, with no USDC, TUSD, or UDSJ tokens. This depletion also seriously threatens the stability and credibility of USDD as a reliable stablecoin.
