Stablecoin USDR, based on the real estate market, has experienced an unexpected drop in value to $0.53 per coin. The team behind the project is reassuring investors, assuring that this is only a temporary problem due to liquidity issues, and that real estate and digital assets will be used to support redemptions.
USDR plunge
On October 11, in a message on X (Twitter), the Tangible team explained that there had been a flash buyout of all available DAI tokens, which are collateral for the USDR. This in turn led to a sudden drop in stablecoin’s market capitalization. The team added that “coupled with the lack of available DAIs to be redeemed, there was a panic sell-off, which caused the USDR to depreciate.”
Ultimately, the USDR exchange rate fell to $0.5040 per coin, but recovered slightly shortly thereafter, reaching close to $0.53.
Although the value of the USDR declined by almost 50%, the developers assure that they are working to solve the problem, insisting that this is merely the result of a temporary liquidity problem that has temporarily hindered the coin redemption process. The Tangible team stated: “This is a liquidity issue. Real estate and digital assets that support the USDR remain unaffected and will be used for redemptions.”
It is worth clarifying at this point that the USDR, is backed by a variety of cryptocurrencies and real estate assets. It is issued by the aforementioned Tangible Protocol, which is a decentralized financial project oriented towards tokenization of not only real estate but also other real assets.
Thus, the project’s website stated in a news release dated October 11, at 21:57 UTC, that the value of the project’s assets still exceeds the coin’s entire market capitalization.
Another stablecoin with problems
About 14.74% of USDR’s collateral is made up of Tangible (TNGBL) tokens, which are an integral part of the coin’s ecosystem. The remaining approximately 85.26% is secured by real estate and an insurance fund.
Stablecoins are designed to maintain a constant value, but in extreme market conditions they can lose their properties.
An example of this phenomenon is the USDC coin, which is currently the sixth-largest cryptocurrency by market capitalization. In March of this year, its price fell to $0.885 per coin when several banks in the United States declared bankruptcy. However, it subsequently managed to return to a stable value around $1. In contrast, another stablecoin, UST Terra, lost its value in May and failed to restore it, currently settling around $0.01.
Nevertheless, each of the stablecoins presented in this article, relies (here relied) on a different form of collateral, determining its strength and resilience to market conditions.
Depeg USDR takes a toll – one investor loses more than $131,000
On the same day, 131,350 USDR tokens were exchanged on the OceanSwap platform, which is an aggregator of decentralized exchanges and the DeFi platform, for an amount much lower than $0.0001 in USDC. Moreover, the user of this transaction paid a gas fee of 0.0012 BNB (which was about $0.25).
The drop in the value of the USDR likely prompted some investors to panic sell, leading to potentially serious mistakes. The transaction was tracked down by Lookonchain analysts and made public on the X platform.
