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USDR, a stablecoin introduced by Tangible's asset tokenization protocol, experienced a significant loss of value on Wednesday as it deviated from its peg to the U.S. dollar, resulting in a staggering 50% drop within a few hours. The stablecoin initially traded at $0.996 at 7:53 am ET before plummeting to just $0.50 by noon on the same day.
Stablecoins are designed to maintain price parity with stable assets such as fiat currencies like the U.S. dollar. When stablecoins lose their peg, it typically arises from the instability of the asset reserves backing the tokens or the inability to meet redemption requests from investors.
USDR stands out with its distinctive reserve composition, as it incorporates tokenized real estate. Apart from serving as a dollar alternative, USDR promises holders to generate yields through rental revenue obtained from these real estate holdings. Tangible's website currently indicates a yield of 6.38% for USDR, while its native token TNGBL generates an annual percentage yield (APY) of 10.00%.
In contrast, popular stablecoins like Tether and USD Coin are predominantly backed by cash and short-term U.S. debt, a commonly adopted reserve composition that enables profit generation and facilitates seamless redemption fulfillment.
According to Chainlink's Proof of Reserve system, which verifies Tangible's ownership of collateral, the issuer maintains reserves totaling $49,590,552. Although this should be sufficient to cover the 45 million USDR tokens in circulation, it represents a significant decline from the on-chain audit figure of over $80 million reported on Tuesday.
Additionally, Tangible's website discloses that 'up to 50%' of the provider's reserves are held in DAI, a decentralized stablecoin largely backed by USDC.