TRON’s newly launched stablecoin (USDD) could face trouble just months after launch.
USDD faces its toughest test yet after the US-pegged stablecoin fell to just $0.9807 at 07:52 UTC this morning. At press time, the USDD has recovered slightly but is still a penny below the dollar, trading at $0.9902.
Over the past 24 hours, Bitcoin (BTC) is down 13.5% to $23,763.55, while Ethereum (ETC) is down more, down 18.0% to $1,197.16.
blue monday
The crypto market remains jittery this Monday after lending platform Celsius announced it would suspend all customer withdrawals. The news has added to the prevailing negative sentiment in the market following Terra’s collapse in May.
USDD de-pegging has only added to the rising fear factor in crypto. In response, Tron CEO Justin Sun stated that the Tron DAO that manages USDD is “actively buying crypto… We will add reserve [the] public address once [the] market is stable. Additionally, the #USDD response rate is updated every day.”
In the past hour, Sun and TronDAO have announced another purchase of 650 million USDC, bringing their total to $2.5 billion.
To protect the entire blockchain industry and crypto market, the TRON DAO Reserve increased supply from 650,000,000 #USDC to #TRON. Currently, USDC supply on TRON has reached $2.5 billion.
— TRON DAO Reserve (@trondaoreserve) June 13, 2022
At launch, TRON CEO Justin Sun pledged to over-hedge USDD for $10 billion. So far, TRON’s total reserves in all currencies fall short of this target.
Collateral isn’t the only layer of defense TRON’s CEO has praised. Sun also promised that the “right algorithms” used by Tron would help the bond remain stable “regardless of market volatility.”
Today, those strategies have been put to the test and appear to be at least somewhat flawed.
Source: USDD
USDD on a shaky peg
Despite the easing of USDD’s shaky US dollar peg, the stablecoin remains overcollateralized by 277.54%, according to information on the stablecoin’s homepage.
USDD is backed by TRON (TRX), Tether (USDT), USD Coin (USDC) and Bitcoin Reserves.
“We want USDD to be overcollateralised, which I think will make it easier for market participants to use us going forward,” Sun said earlier this month.
For Terra customers, much of Sun’s script may sound eerily familiar. Both the $10 billion reserve and the breezy confidence of its leadership are stark reminders of Terra before its sinking.
In March, Do Kwon announced that Terra would buy $10 billion worth of BTC to collateralize UST. The plan failed.
Led by Sun, TRON has proven over several years that anything other crypto projects can invent or innovate, Sun’s Tron can mimic just as easily.
With Terra and Do Kwon, Justin Sun may have found two examples that he doesn’t want to copy so quickly.
Disclaimer
All information contained on our website is published to the best of our knowledge and for general information purposes only. Any actions taken by the reader based on the information contained on our website are entirely at your own risk.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.