March 27, 2024
October 11 USDR Crisis
Latest Cryptocurrency News

USDR Crisis: MEV Bot Nets $107,002 Profit on Stablecoin Exchange

During the crisis that unfolded on October 11 involving the real-estate-backed U.S. dollar stablecoin Real USD (USDR), a trader seems to have exchanged 131,350 USDR for 0 USD Coin, resulting in a complete loss of the investment.

According to a report released on October 12 by blockchain analytics firm Lookonchain, this exchange took place on the BNB Chain via the decentralized exchange (DEX) OpenOcean. This occurred at a time when USDR lost nearly 50% of its value due to a liquidity shortage. Subsequently, a maximal extractable value (MEV) bot noticed the price difference and made a substantial profit of $107,002 through an arbitrage trade.

During times of low liquidity, decentralized exchanges can experience significant slippage, sometimes as high as 100%. Back in September 2022, there was an incident where a trader tried to sell $1.8 million in compound USD (cUSDC) through Uniswap v2 and only received $500 worth of assets in return. In that case, another MEV executed an arbitrage trade, but this windfall was compromised within hours.

On October 11, USDR’s value plummeted as users requested redemptions for over 10 million stablecoins. Despite being fully backed, only a fraction of its $45 million in assets was supported by liquid TNGBL tokens at the time, with the rest relying on illiquid tokenized real-estate assets. As explained by analyst Tom Wan, these tokenized assets were created using the ERC-721 standard, making it impossible to fractionate them for liquidity to meet investor redemption requests. Moreover, the underlying real estate properties could not be quickly liquidated to fulfill investor withdrawal demands. In sum, the real USD treasury was unable to fulfill these redemptions, leading to a loss of confidence among investors.

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