Stablecoin

USDC

Real USD

<div class="coinjournal">
 <ul>
 <li>USDR suffered a liquidity crisis, revealing its illiquid assets.</li>
 <li>A trader lost everything swapping USDR for USDC during the crisis.</li>
 <li>An MEV bot profited $107,002 from the arbitrage opportunity.</li>
 </ul>
 The Real USD (USDR) stablecoin recently found itself in the eye of a storm, revealing the pitfalls of the DeFi space.
 A liquidity crunch on October 11 led to a trader swapping 131,350 USDR for 0 USDC, incurring a complete loss. Here’s what transpired:
 <h2 id="the-usdr-liquidity-crunch">The USDR liquidity crunch</h2>
 USDR, a real-estate-backed US dollar stablecoin, faced a liquidity crisis when users requested over 10 million stablecoins in redemptions.
 Although it was advertised as 100% backed, a shocking revelation emerged: less than 15% of its $45 million in assets were backed by liquid TNGBL tokens, with the majority relying on illiquid tokenized real-estate assets.
 The il<a rel="noopener noreferrer nofollow" title="liquid" href="https://thebittimes.com/tag/liquid.html">liquid</a>ity of these real-estate assets stemmed from their tokenization under the ERC-721 standard. This unique standard made it nearly impossible to fractionalize these assets, creating a <a rel="noopener noreferrer nofollow" title="liquid" href="https://thebittimes.com/tag/liquid.html">liquid</a>ity conundrum for investor redemptions. Furthermore, the underlying real estate properties could not be swiftly sold to meet withdrawal requests. Consequently, the USDR treasury was incapable of honouring these redemptions, resulting in a <a rel="noopener noreferrer nofollow" title="crisis" href="https://thebittimes.com/tag/crisis.html">crisis</a> of confidence among investors.
 <blockquote class="twitter-tweet" data-width="500" data-dnt="true">
 Why USDR depegged despite being fully backed: Using Il<a rel="noopener noreferrer nofollow" title="liquid" href="https://thebittimes.com/tag/liquid.html">liquid</a> asset backing <a rel="noopener noreferrer nofollow" title="liquid" href="https://thebittimes.com/tag/liquid.html">liquid</a> Asset
 – USDR is 100% backed. 50% of them come from <a rel="noopener noreferrer nofollow" title="Stablecoin" href="https://thebittimes.com/tag/stablecoin.html">Stablecoin</a>s and the remaining comes from Real-Estate
 – When there is a bank-run (Huge Redemption of USDR), the Stablecoin liquidity in the… https://t.co/xOrsa5gpKU pic.twitter.com/OYhQ0twUUd
 — Tom Wan (@tomwanhh) October 12, 2023
 </blockquote>
 
 <h2 id="the-costly-dex-swap">The costly DEX swap</h2>
 During the USDR liquidity crisis, a trader attempted to withdraw their USDR holdings by executing a swap on the BNB Chain via the decentralized exchange (DEX) OpenOcean. The catch was the severe depegging of USDR, which had plummeted nearly 50% from its par value due to the liquidity crunch.
 In a disastrous turn of events, the <a rel="noopener noreferrer nofollow" title="trade" href="https://thebittimes.com/tag/trade.html">trade</a>r received a grand total of 0 USDC in return for their 131,350 USDR. This meant a complete and crippling loss on their initial investment. In the volatile world of DeFi, where slippage rates on DEXs can reach up to 100% during periods of poor <a rel="noopener noreferrer nofollow" title="liquid" href="https://thebittimes.com/tag/liquid.html">liquid</a>ity, such incidents serve as a stark reminder of the risks at play.
 <blockquote class="twitter-tweet" data-width="500" data-dnt="true">
 Due to the decoupling of the stablecoin USDR, this guy accidentally swapped 131,350 $USDR for 0 $USDC while panic selling $USDR.
 And a MEV bot successfully arbitraged $107K.https://t.co/FHOJtaGcSDhttps://t.co/IYtoqar29N pic.twitter.com/USLF1qkVDK
 — Lookonchain (@lookonchain) October 12, 2023
 </blockquote>
 
 The story took an interesting twist as a maximal extractable value (MEV) bot swooped in to seize an arbitrage opportunity. Recognizing the substantial price discrepancy, this automated trading algorithm profited handsomely, netting a staggering $107,002 in gains through a well-timed arbitrage trade.
</div>
Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/usdr-liquidity-crisis-costs-a-trader-131-350-stablecoins-tbt66188.html">https://thebittimes.com/usdr-liquidity-crisis-costs-a-trader-131-350-stablecoins-tbt66188.html</a>

USDR liquidity crisis costs a trader 131,350 stablecoins

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