{"id":23966,"date":"2023-10-12T20:11:15","date_gmt":"2023-10-12T20:11:15","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/usdr-liquidity-crisis-costs-a-trader-131350-stablecoins\/"},"modified":"2023-10-12T20:11:15","modified_gmt":"2023-10-12T20:11:15","slug":"usdr-liquidity-crisis-costs-a-trader-131350-stablecoins","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/usdr-liquidity-crisis-costs-a-trader-131350-stablecoins\/","title":{"rendered":"USDR liquidity crisis costs a trader 131,350 stablecoins"},"content":{"rendered":"<p><b>(Originally posted on : CoinJournal: Latest Bitcoin, Ethereum &amp; Crypto News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"post-article-image  -mt-24  mb-8  lg:-mt-32  rounded  overflow-hidden\">\n<picture><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/10\/1697140745156-20e584d3-cdb5-4ccd-ab04-aba62c4bf3e8-smartcrop-750x375.webp\" type=\"image\/webp\" media=\"(min-width: 750px)\"\/><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/10\/1697140745156-20e584d3-cdb5-4ccd-ab04-aba62c4bf3e8-smartcrop-363x181.webp\" type=\"image\/webp\"\/><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/10\/1697140745156-20e584d3-cdb5-4ccd-ab04-aba62c4bf3e8-smartcrop-750x375.jpg\" type=\"image\/jpeg\" media=\"(min-width: 750px)\"\/><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/10\/1697140745156-20e584d3-cdb5-4ccd-ab04-aba62c4bf3e8-smartcrop-363x181.jpg\" type=\"image\/jpeg\"\/>\n<\/picture>                    <\/div>\n<ul>\n<li>USDR suffered a liquidity crisis, revealing its illiquid assets.<\/li>\n<li>A trader lost everything swapping USDR for USDC during the crisis.<\/li>\n<li>An MEV bot profited $107,002 from the arbitrage opportunity.<\/li>\n<\/ul>\n<p>The Real USD (USDR) stablecoin recently found itself in the eye of a storm, revealing the pitfalls of the <a href=\"https:\/\/coinjournal.net\/news\/tag\/defi\/\">DeFi<\/a> space.<\/p>\n<p>A liquidity crunch on October 11 led to a trader swapping 131,350 USDR for 0 USDC, incurring a complete loss. Here\u2019s what transpired:<\/p>\n<h2>The USDR liquidity crunch<\/h2>\n<p>USDR, a real-estate-backed US dollar stablecoin, faced a liquidity crisis when users requested over 10 million stablecoins in redemptions.<\/p>\n<p>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.<\/p>\n<p>The illiquidity 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 liquidity 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 crisis of confidence among investors.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Why USDR depegged despite being fully backed: Using Illiquid asset backing liquid Asset<\/p>\n<p>\u2013 USDR is 100% backed. 50% of them come from stablecoins and the remaining comes from Real-Estate<\/p>\n<p>\u2013 When there is a bank-run (Huge Redemption of USDR), the Stablecoin liquidity in the\u2026 <a href=\"https:\/\/t.co\/xOrsa5gpKU\">https:\/\/t.co\/xOrsa5gpKU<\/a> <a href=\"https:\/\/t.co\/OYhQ0twUUd\">pic.twitter.com\/OYhQ0twUUd<\/a><\/p>\n<p>\u2014 Tom Wan (@tomwanhh) <a href=\"https:\/\/twitter.com\/tomwanhh\/status\/1712379528138633327?ref_src=twsrc%5Etfw\">October 12, 2023<\/a><\/p>\n<\/blockquote>\n<h2>The costly DEX swap<\/h2>\n<p>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.<\/p>\n<p>In a disastrous turn of events, the trader 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 liquidity, such incidents serve as a stark reminder of the risks at play.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Due to the decoupling of the stablecoin USDR, this guy accidentally swapped 131,350 <a href=\"https:\/\/twitter.com\/search?q=%24USDR&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$USDR<\/a> for 0 <a href=\"https:\/\/twitter.com\/search?q=%24USDC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$USDC<\/a> while panic selling <a href=\"https:\/\/twitter.com\/search?q=%24USDR&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$USDR<\/a>.<\/p>\n<p>And a MEV bot successfully arbitraged $107K.<a href=\"https:\/\/t.co\/FHOJtaGcSD\">https:\/\/t.co\/FHOJtaGcSD<\/a><a href=\"https:\/\/t.co\/IYtoqar29N\">https:\/\/t.co\/IYtoqar29N<\/a> <a href=\"https:\/\/t.co\/USLF1qkVDK\">pic.twitter.com\/USLF1qkVDK<\/a><\/p>\n<p>\u2014 Lookonchain (@lookonchain) <a href=\"https:\/\/twitter.com\/lookonchain\/status\/1712446623362760763?ref_src=twsrc%5Etfw\">October 12, 2023<\/a><\/p>\n<\/blockquote>\n<p>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.<\/p>\n<div class=\"post-meta\">\n<hr class=\"mb-6\"\/>\n<h6 class=\"text-3xl  mb-4  text-green-300\">Share this article<\/h6>\n<hr class=\"mb-6\"\/>\n<h6 class=\"text-3xl  mb-4  text-green-300\">Categories<\/h6>\n<hr class=\"mb-6\"\/>\n<h6 class=\"text-3xl  mb-4  text-green-300\">Tags<\/h6>\n<\/p><\/div>\n<\/p><\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\"https:\/\/coinjournal.net\/news\/usdr-liquidity-crisis-costs-a-trader-131350-stablecoins\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : CoinJournal: Latest Bitcoin, Ethereum &amp; Crypto News ) USDR suffered a liquidity crisis, revealing its illiquid assets. A trader lost everything swapping USDR for USDC during the crisis. An MEV bot profited $107,002 from the arbitrage opportunity. The Real USD (USDR) stablecoin recently found itself in the eye of a storm, [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":23967,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[35],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/23966"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=23966"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/23966\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/23967"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=23966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=23966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=23966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}