Real estate-backed stablecoin USDR lost its peg to the U.S. dollar after a rush of redemptions caused a draining of liquid assets such as Dai 

DAI

$1.00

from its treasury, its project team has revealed. 

USDR — backed by a mixture of cryptocurrencies and real-estate holdings — is issued by Tangible protocol, a decentralized finance project that seeks to tokenize housing and other real-world assets.

USDR is mostly traded on the Pearl decentralized exchange (DEX), which runs on Polygon.

In an Oct. 11 tweet, Tangible explained that over a short period of time, all of the liquid DAI from the USDR treasury was redeemed, leading to an accelerated drawdown in the market cap, adding:

"Combined with the lack of DAI for redemptions, panic selling ensued, causing a depeg."

USDR experienced a flood of selling at around 11:30 am UTC, driving its price as low as $0.5040 per coin. It recovered slightly, to around $0.53 shortly afterward.

USDR loses its peg on Pearl DEX. Source: DEXScreener

Despite the coin losing nearly 50% of its value, the project’s developers have vowed to provide “solutions” to the problem, saying it was merely a liquidity issue that has temporarily challenged redemptions.

“This is a liquidity issue,” they stated. “The real estate and digital assets backing $USDR still exist and will be used to support redemptions.”

Despite this loss to the treasury, the app’s official website stated on October 11 at 9:57 pm UTC that its assets are still worth more than the entire market cap of the coin.

USDR total backing vs. market cap. Source: Tangible.

14.74% of USDR’s collateral consists of Tangible (TNGBL) tokens, which are part of the coin’s native ecosystem. The team claims that the remaining 85.26% are collateralized by real-world housing and an “insurance fund.”

Stablecoins are intended to always be worth $1 on the open market. But they sometimes lose their peg under extreme market conditions.

Circle’s USDC , the sixth-largest cryptocurrency by market cap as of October 11,fell to $0.885 per coin on March 11 when several banks in the U.S. went bankrupt, but it regained its peg on March 14. Terra’s UST lost its peg in May and never recovered. It is valuedat $0.01 per coin as of October 11, according to data from Coinmarketcap.