Tron’s stable coin ‘USDD’ loses its peg
- The founder team of Tron deployed more capital as its stablecoin USDD deviated from the $1 peg.
- As USDD, the native stablecoin of Tron, dropped to $0.97, Justin Sun tweeted something similar that goes back to Do Kwon’s Terra collapse.
On Monday, December 12, 2022, the USDD stablecoin, which is based on Tron, reached a low of $0.969, falling once more below the $1 threshold. The founder of Tron, Justin Sun, tweeted that he had traded USDD, the native stablecoin of the network, for a total of about $773,000 amid the decline in USDD’s value.
The founder of Tron imitated a tweet from Terraform Labs CEO Do Kwon just before Terra’s bankruptcy in May by writing, “Deploying more capital—steady lads.”
The Tron-based algorithmic stablecoin went live on May 5 and has a market worth of over $708 million right now. In order to prevent a repeat of UST’s collapse, according to Justin Sun, founder of Tron, USDD would be heavily collateralized by low-volatility assets like USDT, USDC, and Bitcoin.
The Tron DAO Reserve’s whitelisted members can now burn native TRX tokens to produce extra USDD stablecoins. A similar mechanism was used by UST, where users may create extra UST by burning the native LUNA token of the network.
The crypto community is concerned that the dollar-pegged currency created following Terra’s now-defunct algorithmic stablecoin, UST, may be the next to collapse given USDD’s failure to restore its peg.
A rise in the stablecoin’s domination rate in the USDD/3CRV liquidity pool based on the decentralised exchange Curve goes hand in hand with the prolonged de-pegging of the USDD.
However, USDD accounted for 86% of the pool’s $34.5 million total liquidity at the time of publication, up from 80% on November 10. Users are replacing USDD more frequently than DAI, USDC, and USDT for the other pool components because of the substantial disparity.
At 8:00 a.m. (ET) on December 12, USDD is allegedly 200.8% overcollateralized, according to the website for the Tron stablecoin. Sun tweeted, “If anyone has any questions regarding [USDD], it is 200% collateralized ratio on usdd.io.” The founder of Tron continued, “You can examine all live data on blockchain 24*7.”