In an unexpected turn of events, a decentralized finance (DeFi) user accidentally lost a fortune after trading $131,350 in wrapped USDR (wUSDR) for $0 in USDC.
The transaction was initially recorded on DeFi and DEX aggregator OpenOcean by X (formerly Twitter) user @rektfencer.
The DeFi user exchanged $131,350, equivalent to approximately $141,729.77 in Real USD’s stablecoin, for just $0.0001 in Circle’s USDC.
To further complicate the matter, a transaction fee of 0.0012 BNB coins (or approximately $0.25) was charged when the swap was executed.
Lookonchain – an on-chain data analytics platform – provided more context on this unusual turn of events and has attributed the entire situation to the USDR stablecoin depegging from its dollar peg.
As a result, the DeFi user inadvertently executed the swap while hastily selling the USDR in an attempt to get back the blocked funds. But this didn’t turn out well as the user lost their entire money.
Additionally, a maximum extractable value (MEV) bot took advantage of the event to arbitrage $107,000.
USDR is a stablecoin provided by the TangibleDAO blockchain protocol. It is the world’s first stablecoin backed by tokenized, yield-bearing real estate.
The stablecoin has a built-in value accumulation system and holders can earn a consistent passive income stream from rental income earned from these tokenized countries.
Under the TangibleDAO protocol, USDR holders can get a daily rebase of between 5% and 10% annual percentage yield (APY).
The tokenized real estate was pegged to the US dollars and used MakerDAO’s Dai stablecoin as collateral.
However, a significant wave of redemptions totaling $11.8 million to Dai left users with a bag of illiquid real estate assets.
With only the real estate backing the USDR stablecoin, a massive sell-off of the stablecoin occurred, leading to a disconnect from the $1 price peg.
The project’s stablecoin fell to $0.51 before returning to $0.58 a few hours later.
However, the price has since fallen to $0.5351 at the time of writing.
Speaking about the crypto run-on-bank, the TangibleDAO team said that the stablecoin smart contract had too many attack vectors in its design and the security protocols intended to protect users could be easily manipulated.
“We can protect our users at the current size, but as we continue to scale, it may become impossible. We have always done our best to protect our community and investors. In this case, USDR is turning out for the better” , says TangibleDAO. declared.
Way forward: POL assets and insurance funds
While USDR is winding down its operations, the TangibleDAO team is not abandoning its users.
Providing details of its next action, the team said it would liquidate Pearl’s protocol managed liquidity (POL) and insurance fund assets. It will also launch a pool of tokenized real estate called “baskets.”
For now, the Decentralized Autonomous Organization (DAO) protocol has earned approximately 2.44 million in Dai, USDC, and USDT through the burning (permanent token deletion) of its USDR.
Users will be able to exchange their USDR for stablecoins, basket tokens and locked TNGBL (TangibleDAO’s real-world asset) on a 3 to 3 basis in the near future.