- TRON’s stablecoin USDD recently lost its peg with the USD amidst marketwide fears of a crash.
- Justin Sun informed the community that TRON DAO reserve will deploy $2 billion to re-establish USDD’s peg.
- Terra whistleblower FatMan identifies a pricing bug that shows USDD as completely collateralized, 100%, despite the decline in TRON price.
TRON’s decentralized stablecoin USDD lost its peg by nearly 1%. Justin Sun has assured the community that the TRON DAO reserve will protect USDD from a de-peg.
TRON’s USDD could face a similar fate as Terra’s LUNA
TRON’s decentralized stablecoin made headlines over the past two weeks for the over-collateralization of USDD. The stablecoin, however, suffered a de-peg today, slipping nearly 1% from its peg of $1.
After Terra’s LUNA collapse, Justin Sun, the founder of TRON, informed the community that a planned move had been accelerated, and the decentralized stablecoin USDD was modified to avoid a similar fate as Terraform Lab’s UST.
Sun assured users that the TRON DAO Reserve would be very active in the market. The algorithmic stablecoin made its debut in May 2022 and decided to boost transparency and add collateral to safeguard against a crash.
The estimated circulating supply of USDD is $723.3 million, as indicated by CoinGecko and usdd.io. The collateralization ratio is indicated as 278.58% as of June 13, 2022. TRON started on June 12, 2022, guaranteeing a minimum collateral ratio of 130%.
The collateral ratio is the ratio between the collateral and the issued stablecoin. However, crypto Twitter and experts believe this is a bug.
USDD reserves and collateral ratio details from usdd.io
A member of Proximity Labs, a global team of coders and experts, has said the USDD collateral ratio is incorrect. Interestingly, FatMan, a whistleblower from the Terra community who has investigated the collateral ratio, asked his followers if the USDD burnt (locked) collateral was hard coded to display a fully backed USDD supply despite the TRX price falling?
Actually, after looking it up on Twitter, I don't think it's a bug. Worse - it's intentional design. They're claiming the burning contract is collateral but are using an old TRX price instead of the current one... It makes both the collateral figures and ratio false & misleading.
— FatMan (@FatManTerra) June 13, 2022
The whistleblower argues that it could be an intentional design instead of a bug since the “burnt” collateral is worth exactly the same as the USDD supply.
Justin Sun assured USDD peg will be maintained
After USDD’s de-peg, Justin Sun, founder of Tron, assured the community that the TRON DAO Reserve would deploy funds to protect TRX from the funding rate of the asset being shorted on Binance.
TRON DAO will therefore deploy $2 billion, to fight short positions on Binance and fight a negative 500% APR. Sun told followers that a short squeeze was coming. The DAO’s reserve has seen an injection of 800 million USDC to defend the peg of the decentralized stablecoin USDD.
$800 million USDC has been deployed to Binance by TRON DAO reserve at the time of writing.
Funding rate of shorting #TRX on @binance is negative 500% APR. @trondaoreserve will deploy 2 billion USD to fight them. I don't think they can last for even 24 hours. Short squeeze is coming. pic.twitter.com/VRExM6UK70
— H.E. Justin Sun (@justinsuntron) June 13, 2022
Analysts identify weekly top losers
FXStreet analysts have evaluated the top cryptocurrencies to identify losers from the past week. These cryptocurrencies could witness further price decline. For more information, watch this video:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Pro-crypto French Hill selected as Chairman of the House Financial Services Committee
Republicans selected French Hill as the new Chairman of the House Financial Services Committee. Hill is a crypto supporter and spearheaded the FIT21 bill for crypto regulations. French Hill will be replacing Chair Patrick McHenry, who is retiring from office.
Ethereum could see new all-time high above $5,000, on-chain data signals bullish momentum
Ethereum is up 1% on Thursday as it aims to tackle the selling pressure near the $4,000 psychological level. On-chain data shows that ETH has begun seeing increased bullish momentum, which could push its price to a new all-time high above $5,000.
Crypto Today: Bitcoin price tops $102K as Trump’s firm acquires Ethereum and Chainlink
Cryptocurrency market valuation broke $3.5 trillion Thursday, up 9.4% since Tuesday's market crash halt. In the last 24 hours, 104,700 traders liquidated $172.7 million in long contracts, accounting for 58% of the $298.5 million total liquidations.
Shiba Inu Price Prediction: SHIB set for $0.00004000 breakout as ETH leads market recovery
Shiba Inu price has rebounded 22% from its 14-day low of $0.00002400 recorded during the crypto market dip on Tuesday. With the Ethereum ecosystem attracting rapid capital inflows, is SHIB on the verge of a major breakout?
Bitcoin: Long-awaited $100K milestone meets profit taking
Bitcoin ends the working week hovering around $98,000 after a very volatile Thursday when it surpassed the $100K milestone and underwent a sharp correction. Strong institutional demand, whale accumulation, and the choice of a pro-crypto figure to lead the US SEC fueled the rally this week.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.