Following the Terra UST fallout and the current crypto market volatility, many eyes have turned to Tron-based algorithmic stablecoin USDD. On June 13, crypto asset Tron (TRX) lost significant value and Tron founder Justin Sun spoke about traders shorting the digital currency. Sun explained that the Tron DAO reserve would put up $2 billion to “fight them” and said he doesn’t think the shorters could last 24 hours. Additionally, stablecoin USDD made a small dive on Monday, dropping to $0.977 per unit amid the crypto market carnage.
Another stablecoin wobbles as crypto-economy plummets in value – Tron DAO Reserve deploys USDC to defend USDD-Peg
On one of the blackest Mondays in the crypto-asset world, stablecoin USDD fell to $0.97 per unit and Tron DAO Reserve had to deploy funds to defend $1 parity. “Extreme conditions for the market, [Tron DAO Reserve] received 700 million USDC for defense [the] USDD bond. Now the USDD collateralization rate is close to 300%,” according to the organization tweeted.
While a quick drop to $0.97 isn’t the biggest deal for some investors and USDD returned to the $0.99 region, the same thing happened to UST the day before the massively larger detach. It is also said that Tron’s native asset TRX is being heavily shorted by traders and Justin Sun stated that $2 billion would offset the short selling that would cause a short squeeze.
“TRX short sale funding rate on Binance is negative 500% APR,” Sun tweeted. “[Tron DAO Reserve] will deploy $2bn to fight them. I don’t think they can last 24 hours. [A] Short squeeze is coming,” he added.
Sun believes the over-collateralization will make market participants “more comfortable” with USDD
Then the Tron DAO Reserve announced a series of purchases to defend the peg. After the 700 million USDC was bought, the organization became Bought another 100 million USDC, and then another 100 million more USDC after that.
“Currently, the USDC supply of TRON has reached $2.5 billion,” Tron DAO Reserve noted afterwards Adding 650 million USDC to reserve. Tron’s claim is that USDD support will be overcollateralized by at least 130%, and Sun believes this method will make the stablecoin easier for investors to engage with.
“We want USDD to be overcollateralised, which I think will make it easier for market participants to use us going forward,” Sun told Bloomberg on June 5.
What are your thoughts on Tron stablecoin USDD and its fight against market carnage? Let us know what you think about this topic in the comment section below.
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