Thread by @resdegen

1/ This is nuts

@usddio @trondaoreserve & @trondao are deceiving the market with $USDD

They are claiming that $USDD is collateralized at over 200% and this information is technically FALSE

I'm gonna explain why 🧵👇

2/ According to their articles, they claim that collateral ratio is over 200%

Let's check some data at tdr.org/#/

- $USDD supply = 667M
- $TRX burnt = $667M = $USDD supply
- Reserves = $787M
- Collateral ratio = 218%

3/ Collateral ratio is defined as the ratio between the collateral and the issued stablecoin:

Collateral ratio = Reserves / Total_USDD_issuance = 787 / 667 = 118%

Huh? Why does the website show Collat. Ratio = 218% then?

4/ Well, they are considering the 8.29B $TRX burnt as collateral! 🤯

Let's review the math then

Reserves + 8.29B $TRX burnt (= $USDD supply) = $787M + $667M = $1.454B

Then Collat. Ratio = 1.454 / 0.667 = 218%

Voilà!

5/ They use this formula:

Collat. Ratio = (Reserves + TRX_burnt) / Total_USDD_supply

then

Collat. Ratio = Reserves / Total_USDD_supply + TRX_burnt / Total_USDD_supply

If $TRX goes up in price. All good. If $TRX goes down in price, then TRX_burnt / Total_USDD_supply < 1

6/ "Well, they have other reserves..." ha! let's explore that as well

Reserves = 13,040 $BTC + 240M $USDT + 1.9B $TRX

Are you kidding me?

You didn't have enough with claiming $TRX burnt is collateral. You also had to add it to the "Reserves"

7/ The same coin that is designed to be minted when $USDD is redeemed, is used as a Reserve Asset. Seems safe!

"Hey $UST guys, it's okay, everything is backed by $LUNA tokens, we can't go to 0"

Out of the $787M in the "Reserves", $156M are in the form of $TRX. A whopping 20%

8/ The Collat. ratio should be considered (1) without the burnt $TRX and (2) without $TRX in the Reserves

- If we substract (1) --> Collat = $787M & Collat. Ratio = 118%
- If we substract (1) and (2) --> Collat = $631M & Collat. Ratio = 95%

Let's remember $USDD supply = $667M

9/ Let's then recapitulate. As per the formula they use:

Collat. Ratio = Reserves / Total_USDD_supply + TRX_burnt / Total_USDD_supply

- If $TRX goes down in price, then TRX_burnt / Total_USD_supply < 1 (it doesn't really make sense to even discuss this, but anyways)

10/ You have the other part of the equation: Reserves / Total_USDD_supply

As you see, if you currently substract $TRX value from the Reserves, Reserve < Total_USDD_supply

Can that happen? Well, if $USDD starts to be sold, more $TRX will be minted and the $TRX price will go down

11/ If it goes down enough so that $BTC + $USDT + $TRX < Total $USDD then you have a problem and $USDD would depeg

So if $TRX price goes up, all good. If $TRX price goes down, not that good. Does that remind you of something?

12/ Summarizing:

They claim to have a 218% collateral ratio, out of which:

- 100% is the $TRX burnt to mint $USDD
- 24% is $TRX in Reserves (the asset involved in the minting / burning mechanism)

Real collateral is 118%
Substracting $TRX from the Reserve, Collat. Ratio = 95%

13/ Links:

USDD medium post: medium.com/@usddio/usdd-u…

Bloomberg: bloomberg.com/news/articles/…

Burning address: tronscan.org/#/contract/TNM…

Reserves: tdr.org/#/

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15/ Additional info here:

https://twitter.com/resdegen/status/1533777191154196485