Swap Gone Wrong
During the recent crisis surrounding the real-estate-backed stablecoin Real USD (USDR), a trader made a costly mistake. They swapped 131,350 USDR for 0 USD Coin (USDC), resulting in a complete loss on their investment.
The Details
The swap took place on the BNB Chain through decentralized exchange OpenOcean, according to a report by blockchain analytics firm Lookonchain. This happened during a time when USDR's value had dropped nearly 50% due to a liquidity crunch. A bot that takes advantage of discrepancies in the market (MEV) then profited $107,002 through an arbitrage trade.
Poor Liquidity Risks
During periods of poor liquidity, decentralized exchanges (DEXs) can experience slippage as high as 100%. In a previous incident reported by Cointelegraph, a trader tried to sell $1.8 million in Compound USD (cUSDC) through Uniswap DEX V2 but only received $500 worth of assets. In that case, an MEV bot also profited from an arbitrage trade, but their $1 million in profits were later hacked.
Why USDR Depegged
On October 11, USDR depegged from its par value after users requested over 10 million stablecoins for redemption. Despite being 100% backed, only around 15% of its $45 million in assets were backed by liquid project tokens TNGBL, with the rest being illiquid tokenized real-estate assets.
According to analyst Tom Wan, the tokenized assets were minted on the ERC-721 standard and could not be fractionated to create liquidity for investor redemptions. Additionally, the underlying homes could not be immediately sold to meet investor withdrawal requests. As a result, the Real USD Treasury was unable to fulfill the redemptions, leading to a collapse in investor confidence.
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