TL: DR
- USDR’s value dropped due to massive withdrawals from its DAI reserves.
- Real estate assets made USDR’s liquidation challenging during the crisis.
- Tangible remains committed to innovating despite USDR’s setback.
In a recent development within the cryptocurrency sector, Tangible, the real estate-backed stablecoin USDR issuer, has announced plans to liquidate the token’s assets and initiate a redemption process. This move comes after USDR’s significant devaluation, which saw its value plummet from its $1 peg to nearly 50 cents. The sudden drop was primarily attributed to a massive drain in the asset’s DAI reserves, as investors rapidly withdrew their funds.
Michael Slatkin, the head of marketing for Tangible, communicated the company’s intentions in a recent announcement on their Discord server. “Our primary objective at this juncture is to ensure that our users are compensated,” he stated. This sentiment offers hope to the affected investors, who have been anxiously awaiting a resolution.
Redemption Process Offers Hope to USDR Holders
For those holding USDR, the redemption process will allow them to exchange their devalued stablecoins for a diversified portfolio of cryptocurrency assets. Some of these assets are tied to real estate properties located in the U.K. However, the exact value that this redemption process will yield remains uncertain, and the entire procedure could span several months.
USDR’s fall is one of the inaugural significant setbacks in the emerging sector of the crypto market that focuses on real-world assets (RWA). Advocates of RWA are continuously exploring innovative methods to tokenize conventional investments, such as real estate and government bonds. At the time of the crisis, the $45.5 million USDR in circulation was trading at a staggering 43% discount.
Interestingly, the real estate investments, which constituted 78% of USDR’s backing, had previously offered investors returns as high as 16%. This attractive yield rate positioned USDR as a more enticing option than other prevalent dollar-pegged assets, like Circle’s USDC. However, this allure also came with heightened risks. While Circle maintains a significant portion of its stablecoin reserves in highly liquid and ultra-secure short-term Treasury bonds, USDR’s investments were tied to more speculative and illiquid real estate assets. These assets proved challenging to liquidate swiftly, especially during the recent bank run-like conditions.
Reflecting on the situation, Slatkin remarked, “We ventured into uncharted territory, gained invaluable insights, and remain committed to evolving.” He added that Tangible would cease associating with USDR after the redemption process. However, the company is not backing down. “We are poised to launch new products, both known and yet-to-be-revealed, that will build upon the foundation laid by Real USD. Tangible is determined to spearhead innovations in this domain,” Slatkin concluded.
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