After the fallout of Terra UST and the current crypto market volatility, many eyes are focused on the Tron-based algorithmic stablecoin USDD.On June 13, crypto asset Tron (TRX) dropped significantly in value, and Tron founder Justin Sun spoke about traders shorting the digital currency; Sun explained that the Tron DAO Reserve is putting in $2 billion to “fight them,” and that shorters have 24 hours He stated that he does not expect it to last. Additionally, stablecoin USDD took a small dive on Monday, falling to $0.977 per unit during the crypto market carnage.
Another stablecoin wobbles while the value of the crypto economy drops significantly – Tron DAO Reserve deploys USDC to defend USDD peg
In one of the darkest Mondays in the crypto asset world, stablecoinfell; USDDfell to $0.97 per unit and Tron DAO Reserve had to deploy funds to defend its $1 parity.” Against market extremes, [Tron DAO Reserve] has received 700 million USDC to protect the USDD peg [1]. Now the USDD collateral rate is almost 300%.” The organization tweeted .
The quick dip to $0.97 was not the biggest problem for some investors,USDDreturned to $0.99 territory, but the same happened to UST the day before the massive de-peg. USDDreturned to $0.99 territory, but the same thing happened to UST the day before the big de-peg. Also, Tron’s native assetTRXis said to be heavily shorted by traders, which Justin Sun describes as offsetting the shorts causing short squeeze by $2 billion.
“Short” funding rateon Binance’s TRXis APR minus 500%,” Sun tweeted . “[TRX DAO Reserve] will put US$2 billion to fight them. I don’t think they can hold out for even 24 hours . [A short squeeze] is coming,” he added.
Sun believes that over-collateralization will make market participants “more comfortable” with the USD
Subsequently, Tron DAO Reserve announced a number of purchases meant to protect the peg: after purchasing 700 million USDC, the organizationpurchased another 100 million USDCand thenpurchased another 100 millionUSDC.
“Currently, TRON’s USDC supply has reached $2.5 billion,” TRON DAO Reserve said after adding650 million USDC. Tron claims that the USDD backing is at least 130% overcollateralized, and Sun believes this method makes investors more comfortable with stable coins.
“We want USDD to be overcollateralized, which I think will make market participants more comfortable using us in the future,” Sun told Bloombergon June 5.
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