The past two years have seen a number of stablecoins lose their peg to the dollar, and this week it was the turn of Real USD (USDR), a stablecoin backed by real estate assets. On Wednesday, USDR lost its peg to the dollar, causing its value to plummet by almost 50%. According to data from CoinGecko, the coin dropped to $0.53.
USDR is managed by TangibleDAO, a Decentralized Autonomous Organization (DAO) responsible for its issuance. According to the DAO, the stablecoin experienced a liquidity problem which caused the rapid depreciation of USDR. However, the DAO did not provide an explanation for the exact cause of this problem.
On the morning of the 11th, USDR lost its dollar peg. Three hours after this disconnection, both USDR and its balance token, TNGBL, witnessed a 50% drop in their market value. This drop deepened as the loss of parity led investors to sell off the currency.
In addition to real estate, USDR was backed by various stablecoins and altcoins, such as the stablecoin DAI. Its portfolio covers over 250 real estate properties, all located in the United Kingdom.
Following the incident, TangibleDAO responded with a statement on its official X account. The team explained that the sudden disconnection was mainly due to a liquidity problem. The assets that back USDR, both real estate and digital, are secure.
The issue is that due to its real estate backing, the liquidity of the project becomes quite limited. In fact, the DAO stated that it intends to use its real estate assets to reimburse users for their losses. However, the illiquid nature of these assets means that the organization cannot provide a timeline for this to happen.
TangibleDAO also indicated that it is actively working on solutions to resolve the liquidity problem and restore confidence in the stablecoin.
The incident came to light when protocol users noticed that all DAI collateral had been withdrawn. As a result, the real estate portfolio made up 60% of the USDR collateral. This change led USDR users to quickly trade their assets due to concerns about the lack of liquidity in this part of the portfolio.
Consequently, the price of USDR plunged to $0.50. Liquidity and market value plummeted, leading to further declines.
According to on-chain data provided by TangibleDAO, the USDR treasury currently holds zero DAI, with only a $6.2 million insurance fund available. However, the circulating supply of 45 million USDR was initially valued at $45 million. In other words, over seven times the value of the insurance.
Furthermore, data from the Polygon Block Explorer shows that some traders are exchanging USDR in USDC trading pairs for a fraction of its value. Despite the crisis, the USDR website continues to offer a yield of 16% in USDR, with over 60% of these rewards paid in TNGBL tokens.