Summary: USDR, a real-estate-backed stablecoin, experienced a liquidity crisis when users requested redemptions. It was revealed that less than 15% of the assets were backed by liquid tokens, with the majority relying on illiquid tokenized real-estate assets. During the crisis, a trader lost 131,350 USDR by swapping it for 0 USDC, resulting in a complete loss. However, a maximal extractable value (MEV) bot was able to profit $107,002 from the arbitrage opportunity.
The USDR liquidity crunch
USDR, a stablecoin backed by real estate, faced a liquidity crisis when users sought redemptions. However, it was discovered that only a small percentage of its assets were backed by liquid tokens, with the majority relying on illiquid tokenized real estate assets. These assets were difficult to sell quickly, leading to a liquidity problem and causing a lack of confidence among investors.
The costly DEX swap
During the liquidity crisis, a trader attempted to withdraw their USDR holdings by swapping it for USDC on the BNB Chain through the decentralized exchange OpenOcean. However, due to the severe depegging of USDR, the trader received 0 USDC in return for their 131,350 USDR. This resulted in a significant loss on their initial investment, highlighting the risks involved in DeFi trading.
A MEV bot took advantage of the price discrepancy and profited $107,002 through an arbitrage trade.
What caused the USDR liquidity crisis?
The liquidity crisis of USDR was triggered when users requested redemptions, and it was discovered that majority of the assets were illiquid tokenized real estate assets.
How much did the trader lose in the DEX swap?
The trader lost 131,350 USDR in the DEX swap and received 0 USDC in return.
How much profit did the MEV bot make?
The MEV bot made a profit of $107,002 through the arbitrage opportunity.
What are the risks involved in DeFi trading?
DeFi trading carries risks such as high slippage rates on DEXs during periods of poor liquidity, which can result in significant losses for traders.