On one side, publicly traded companies are crazily hoarding Bitcoin with $43 billion, while on the other side, the USDD stablecoin has an over-collateralization rate of up to 204.5%. An astonishing capital circular loop is hidden between these two.
At two o'clock in the morning, market operators in the crypto market discovered a bizarre data synchronization: when corporate Bitcoin wallets increased their holdings by more than 50,000 BTC, the amount of collateral assets in the TRON DAO reserve also significantly rose. This is no coincidence, but a cross-market capital game in play — corporations use cash on hand to buy Bitcoin and boost market value, yet use these market-favored Bitcoins as collateral to mint seemingly dollar-pegged stablecoin USDD, and then use these stablecoins to buy more Bitcoin...
A huge capital leverage cycle is quietly forming.
01 The dual identity of enterprises: both Bitcoin 'whales' and USDD minters
Since January 2023, the amount of Bitcoin held by listed companies and private enterprises has reached an astonishing 883,000 coins, with total holdings soaring from 197,000 coins to 1,080,000 coins. But this is just the tip of the iceberg.
These enterprises increase their Bitcoin holdings not only to wait for appreciation but also to use them as high-quality collateral. By depositing these Bitcoins into supported protocols like TRON DAO reserves, they can borrow or mint equivalent USDD at a certain collateral rate (such as 150%-200%).
This operation forms a sophisticated financial closed loop:
Enterprises purchase Bitcoin with US dollars or corporate funds
Use Bitcoin as collateral to mint USDD through smart contracts
Use newly minted USDD to buy more Bitcoin or other assets
After asset appreciation, more USDD can be minted
Under this mechanism, enterprises not only enjoy the benefits of Bitcoin appreciation but also gain additional liquidity, amplifying capital utility. Companies like MicroStrategy may be pioneers of this strategy.
02 The triple stability of USDD: Building a safety net for corporate capital games
Why do enterprises choose to use USDD as an arbitrage tool? This stems from the triple stability mechanism designed for USDD, which provides what seems to be a reliable 'safety net' for corporate capital cycles.
The first layer: Excessive collateral protection
USDD currently maintains a collateral rate of about 204.5%, far exceeding the minimum requirement of 120%. This means that for every 1 dollar of USDD issued, there are more than 2 dollars of collateral assets backing it. Even if the value of the collateral shrinks significantly, there is still sufficient buffer.
The second layer: price anchoring mechanism
Through the PSM anchoring stable module, USDD maintains a 1:1 peg with the US dollar. Enterprises can exchange USDD for other major stablecoins without slippage, ensuring liquidity.
The third layer: decentralized oracle
The price of USDD is determined by the votes of TRON super representatives, using a 'weighted median' mechanism to resist manipulation and ensure that the price is not controlled by a single entity.
These three mechanisms work together to provide a stable financial environment for enterprises to use USDD for arbitrage, allowing them to freely convert between Bitcoin and stablecoins, amplifying capital effects.
03 The dangerous capital flywheel: When corporate leverage encounters a market black swan
The current cycle of enterprises concentrating their Bitcoin holdings and using them as collateral to mint USDD forms a self-reinforcing capital flywheel, but there are huge risks hidden behind it.
The operation logic of this flywheel is as follows:
Enterprises announce the purchase of Bitcoin, boosting stock prices and obtaining 'Bitcoin premiums'
After the stock price rises, obtain cheap funds through issuing more shares or bonds
Mint USDD by collateralizing Bitcoin, gaining additional liquidity
Use new funds to purchase more Bitcoin and strengthen the narrative
The stock price continues to rise, starting a new round of cycles
However, once the market turns, this flywheel may operate in reverse, triggering systemic risks. The lessons from the Grayscale Bitcoin Trust (GBTC) crisis are still fresh, where high premiums turned into discounts, leading to the bankruptcy of several giants. If Bitcoin prices fall sharply, the value of corporate collateral may shrink, forcing them to add more collateral or face liquidation, leading to a sell-off of Bitcoin and triggering a chain reaction.
04 The double dilemma of retail investors: How to survive in this game?
Faced with the complex capital games of institutions, retail investors are in double trouble:
Information asymmetry: Institutions hold complete information on capital flows and collateral data, while retail investors can only see the surface price fluctuations of the market.
Cost disadvantage: Institutions can finance at low costs and operate on a large scale, while retail investors often have to bear higher transaction costs and risks.
The risk of becoming a counterparty: In the worst-case scenario, when institutions need liquidity or decide to take profits, retail investors may become their trading counterparts.
What is more concerning is that the seemingly robust triple stability mechanism of USDD could actually become a cognitive trap for retail investors. The USDD oracle system relies on the voting of TRON super representatives, and if enough super representatives collude, they could theoretically manipulate the price benchmark; at the same time, the collateral assets of USDD may have a high concentration, and if the main collateral assets encounter market shocks simultaneously, it could threaten the stability of the entire system.
05 Survival rules in the new cycle: From speculators to strategic investors
In this new cycle dominated by institutions and complicated capital games, retail investors must adjust their strategies:
When enterprises use the triple stability mechanism of USDD as a tool for capital games, retail investors should understand that the so-called 'stability' is only relative. In the volatile cryptocurrency market, no mechanism can provide absolute guarantees.
The core of this capital game has shifted from simple value storage to complex financial engineering, and what retail investors need to do is to understand the rules of the game to avoid becoming a fragile link in a complex capital structure. Understanding the deeper rules of this game is not only to share the dividends but also to survive in this increasingly complex market ecosystem.
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