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Trader swaps 131k stablecoins for $0 during USDR depeg

October 12, 2023No Comments


During yesterday's real estate-backed US dollar stablecoin Real USD (USDR) crisis, a trader appears to have exchanged 131,350 USDR for 0 USD Coin (USDC), resulting in a complete loss of investment.

According to October 12 report According to blockchain analytics firm Lookonchain, the trade occurred on the BNB chain via decentralized exchange OpenOcean, at a time when USDR was decoupled from face value in almost 50% due to a liquidity crisis. A maximum extractable value (MEV) robot subsequently detected the discrepancy and made a total of $107,002 in profits through an arbitrage trade.

During periods of low liquidity, DEX slippage can reach up to 100%. In September 2022, Cointelegraph reported that a trader attempted to sell $1.8 million in Composite USD (cUSDC) via Uniswap DEX V2 and only got $500 in assets instead. An MEV also, in this incident, made an arbitrage trade before his more than $1 million in profits were hacked just a few hours later.

On October 11, USDR taken off after users requested over 10 million stablecoins in redemptions. Despite being 100% backed, less than 15% of its then $45 million in assets were backed by liquid TNGBL project tokens, with the remainder being backed by illiquid tokenized real estate assets.

As narrated by analyst Tom Wan, the tokenized assets were minted according to the ERC-721 standard, which could not be fractionated to create liquidity for investor redemptions. Additionally, the underlying homes could not be sold immediately to meet investor withdrawal requests. In total, the Treasury in USD reais was unable to meet the repayments, leading to a collapse in investor confidence.

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