Real USD (USDR), a stablecoin backed by real estate holdings, experienced a significant drop in value, plummeting to nearly $0.51 within just a few hours. This sudden decline occurred after the treasury of Tangible DAO, the entity responsible for USDR, was completely drained of DAI. As a result, the treasury now holds no DAI, leaving only a $6.2 million insurance fund available to cover a circulating supply of 45 million USDR. Ideally, these funds would be worth $45 million when pegged. However, the situation is further complicated by the treasury’s backing of the token TNGBL.
TNGBL’s Limited Trading Volume
TNGBL has a total trading volume of less than $300,000 and a bid depth of less than $5,000 on UniSwap. This makes it nearly impossible to liquidate large amounts of the token. Consequently, some traders have resorted to selling their USDR in USDC trading pairs for just pennies on the dollar, according to data obtained from a Polygon block explorer.
Real USD’s Attractive Yield Offer
Despite the current challenges, Real USD’s website continues to offer an enticing 16% yield. This attractive return may draw investors who are willing to take on the risk associated with the stablecoin’s recent instability.
Understanding the Real USD Situation
To fully grasp the implications of this situation, it is crucial to understand the role of stablecoins in the cryptocurrency market. Stablecoins, such as Real USD, are designed to maintain a stable value by pegging them to a reserve of assets, in this case, real estate holdings. This stability is meant to help protect investors from the extreme volatility often seen in the cryptocurrency market.
However, when the treasury backing a stablecoin is drained of its reserves, as has happened with Tangible DAO’s DAI holdings, the stablecoin’s value can become unstable. In the case of Real USD, the drop in value to $0.51 indicates a loss of confidence in the stablecoin’s ability to maintain its peg to the underlying assets.
Impact on Investors and the Crypto Market
The sudden drop in Real USD’s value has likely caused concern among investors, particularly those holding large amounts of the stablecoin. With the limited trading volume and bid depth of TNGBL, liquidating these holdings may prove difficult, if not impossible, for some investors.
This situation also raises questions about the overall stability and reliability of stablecoins in the cryptocurrency market. While many stablecoins have successfully maintained their pegs to underlying assets, the Real USD case serves as a reminder that even these seemingly stable investments can experience significant fluctuations in value.
Looking Ahead for Real USD
As the situation unfolds, it remains to be seen how Tangible DAO will address the challenges facing Real USD. The 16% yield offer on the stablecoin’s website may provide some incentive for new investors to enter the market, but the recent instability in the coin’s value may deter others.
Ultimately, the future of Real USD will depend on the actions taken by Tangible DAO and the confidence of investors in the stablecoin’s ability to maintain its peg to underlying assets. For now, however, the Real USD case serves as a cautionary tale for investors and highlights the potential risks associated with stablecoins in the cryptocurrency market.
