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Real USD, a Polygon-based stablecoin partially backed by real estate objects in the U.K., is suffering a major de-pegging right now. The price of USDR collapsed once the team removed Dai (DAI) from its collateralization basket.
USDR, stablecoin backed by RWAs, drops below $0.5
Real USD (USDR) stablecoin, partially backed by hundreds of real estate objects in the United Kingdom, lost its peg to the U.S. dollar today, on Oct. 11, 2023. In just three hours, both USDR and its "balance" token TNGBL lost over 50% of their capitalization.
Issued by TangibleDAO, the stablecoin was backed by a basket of Dai (DAI) stablecoins, altcoins and over 250 real estate objects in the United Kingdom. Today, some DeFi users noticed that the entire Dai (DAI) collateral was removed: houses are now responsible for 60% of USDR collateral, per its official website.
As this part of the balance portfolio is illiquid, users of USDR started exchanging their assets en masse. As a result, on Polygon-based DeFi Pearl, the price of USDR dropped to $0.5.
The token gained traction thanks to its usage in Aerodrome Finance, a yield farming protocol on trending L2 platform Base. Even now, Tangible website offers over 15% yield on USDR; over 60% of these rewards are paid in TNGBL tokens.
"Bank run" predicted?
Before the run, the token was overcollateralized, with a collateralization ratio at 117%. The price of TNGBL, its core balance asset, dropped by 53% in less than two hours.
Veteran DeFi investor Valentin Mihov stressed that USDR design was too risky back on Sept. 1, 2023. He predicted that a "death spiral" is inevitable once DAI collateral is removed.
Everyone is going crazy about farming with $USDR on @aerodromefi, but you need to be super careful as that stable could potentially enter a death spiral if their $DAI reserves are depleted. Keep an eye on this and better get out if this number goes close to 0 pic.twitter.com/48l2g4wLwW
— Valentin Mihov 🦞🦇🔊 (@valentinmihov) September 1, 2023
Also, he noticed that the token had already been vulnerable to manipulations: a large portion of USDR was minted via TNGBL reserves.
As of press time, the TangibleDAO team has kept silent regarding the accident.