USDR Issuer Aims to Recover Assets and Compensate Users of Failed Property-Backed Stablecoin
A significant setback in the emerging realm of crypto's "real-world assets" sector might be on the verge of providing some solace to investors.
The recent depegging debacle in the crypto sphere could see a positive turn for affected investors. The entity behind the failed real estate-backed stablecoin USDR, Tangible, is now planning to liquidate the token's assets and initiate a redemption process.
"Our primary focus is to compensate our users,"
stated Michael Slatkin, who heads the marketing efforts for Tangible, in the group's Discord server late Wednesday.
USDR holders will have the opportunity to exchange their severely devalued stablecoins for a combination of cryptocurrency assets, including some representing real estate holdings in the U.K. However, the ultimate value returned to investors through this redemption process, which might span several months, remains uncertain.
This week, USDR experienced a drastic fall from its $1 peg, plummeting to nearly 50 cents. The depletion of a substantial portion of the asset's DAI reserves, as investors hurriedly divested from the token, was the primary cause. USDR's primary backing is derived from real estate holdings.
This incident marks one of the initial high-profile failures within a specialized sector of the crypto market known as real-world assets (RWA). Advocates of RWAs seek diverse methods to tokenize conventional investments like real estate and government bonds. Currently, the circulating supply of USDR, amounting to $45.5 million, was trading at a 44% discount.
The real estate ventures, constituting 78% of USDR's collateral, purportedly generated impressive yields of up to 16% for investors. This attribute ostensibly rendered the stablecoin more attractive than commonplace dollar-pegged assets such as Circle’s USDC.
However, it also heightened its level of risk. Circle primarily holds the reserves of its stablecoin in highly liquid and exceptionally secure short-term Treasury bonds. In contrast, USDR's more speculative and less liquid real estate assets cannot be swiftly liquidated to address the bank run-like conditions that unfolded this week, as noted by an investor.
Following the completion of the redemption process, Tangible, which specializes in crafting RWAs, will discontinue its association with USDR, as per Slatkin's statement.
"We embarked on an innovative endeavor, gained valuable insights from the experience, and will continue to progress," affirmed Slatkin in the announcement. "With both announced and unannounced new products, we aim to enhance what was initially developed for Real USD, solidifying Tangible's position as a trailblazer in this category."