As USDD Depeg Deepens, What Is Justin Sun’s Plan?

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tron USDD stablecoin

The Tron ecosystem had a major blow last week when the USDD stablecoin lost its $1 peg. This led to concerns among traders as USDD was launched last month as a rival to Terra’s UST, an algorithmic stablecoin. Another depegging of a similar asset also meant that TRX’s price also dropped for a bit therafter.

USDD’s New Low

On Sunday, USDD fell to its new low of $0.93 before regaining the $0.95 zone. As of writing, the stablecoin is trading at $0.95, down 0.70% in the last 24 hours, according to CoinMarketCap.

More importantly, USDD lost a market cap of around $19 million in the last one week. From having a market size of $715 million on June 13 to dropping to $696 million currently, the stablecoin depegging clearly had an impact.

In fact, the stablecoin failed to gain on its market cap on a daily basis only once before last week’s setback. But for a minor blip on June 2, USDD had a steady increase in market cap ever since its launch on May 5.

Increased Reserves After USDD Depeg

In the wake of the stablecoin’s depegging, the Tron DAO had recently boosted its reserves to back the blockchain. Last week, the DAO increased its USDC supply by 300 million.

Currently, the total collateral value supporting USDD stands at $2.34 billion, which includes 14,040 BTC and $1.08 billion in USDC. With an existing collateral ratio of 323.23%, the Tron DAO wants to ensure the stability and security of USDD by having enough reserves.

The stability and security of USDD are ensured by the over-collateralization of multiple mainstream cryptocurrencies, the Tron team states.

With the USDD depeg, the latest dip to $0.93 caused concerns in the crypto community reminiscing the UST crash. A trader named ‘Austerity Sucks’ on Twitter wondered if there was any mechanism to maintain the USDD peg.

“No mechanism even to hold peg in, just random money issued with an informal “collateralisation” which does nothing to keep peg.”

Meanwhile, Tron is trading at $0.06, down 0.52% in the last 24 hours.

Anvesh reports major developments around crypto adoption and price analysis. Having been associated with the industry since 2016, Anvesh is a strong advocate of decentralized technologies. Follow Anvesh on Twitter at @AnveshReddyBTC and reach him out at [email protected]
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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