Tron’s USDD Stablecoin is still below the desired 1:1 ratio with the USD despite Justin Sun trying to stabilize it.
A few days ago, Tron’s stablecoin, USDD, experienced a tumultuous market shift that caused it to de-peg from the US Dollar. Stablecoins are designed to have a value equal to the USD but in form of crypto to facilitate easier crypto swaps on exchanges. It appears that USDDis failing at this role.
After the de-peg, Tron DAO Reserve moved to try and bring it back up. It withdrew about 2.5 billion TRX from exchanges in a bid to increase the USDD collateral and prevent further price fall of the stablecoin. However, it seems that these efforts haven’t borne any fruits.
At the time of this writing, USDD is valued at around $0.97 – according to data on CoinMarketCap.
Over 320% Collateralization
Tron DAO Reserve has moved to calm the Tron community as panic grips USDD and TRX holders. Investors are worried that the Tron ecosystem might end up like Terra. A few weeks ago, the Terra ecosystem collapsed, leading to a complete fall of Luna and UST prices to below zero.
In a recent Twitter update, Tron DAO Reserve sought to answer a few hard questions about USDD and how the company plans to solve the problem. Apparently, USDD has over 320% collateralization, which means the coin is still in a safe zone despite the price volatility. Having enough collateral means that it cannot fall to reach a liquidation point.
“Currently, USDD has over 320% collateralization rate with USDC 1,080,000,000 / TRX 10,874,566,176 / BTC 14,040.6 / USDT 140,013,886.”
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Currently, USDD has over 320% collateralization rate with USDC 1,080,000,000 / TRX 10,874,566,176 / BTC 14,040.6 / USDT 140,013,886.— TRON DAO Reserve (@trondaoreserve) June 17, 2022
Things To Go Back To Normal In A Few Days
Going on, Tron DAO Reserve opined that USDD will get back to its normal levels within the next few days. This may be taken to mean that the injected funds and collateral are yet to take effect. So far, Tron has allocated around 5.5 billion TRX to stabilize USDD.
Recent Move
A few hours ago Tron Dao injected another $300M USDC to protect tron and USDD.
To safeguard the overall blockchain industry and crypto market, TRON DAO Reserve have increased 300,000,000 #USDC supply on #TRON. Currently USDC supply on TRON has reached $2.8 billion.
— TRON DAO Reserve (@trondaoreserve) June 17, 2022
After all these efforts the USDD is still depegged. As USDD has a small market cap then Terra USD (UST) so there are chances Tron DAO will be able to maintain its 1:1 peg with the dollar but the most concerning thing is that despite all these efforts Tron stable coin is still almost 4% down and what if Tron DAO stop injecting funds or lacks funds to further support the de-pegging, in such a case the results can be catastrophic.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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