USDD stablecoin loses parity with the dollar
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Despite efforts by Justin Sun, CEO of Tron, to create a robust reserve for his algorithmic stablecoin USDD, the digital stablecoin ended up losing its “peg” (parity) with the US dollar.
This Monday (13), amid a bloodbath in the crypto market Tron’s stablecoin dropped to $0, 98.
TRX is impacted by USDD depeg
The USDD “depeg” also impacted the Tron network’s native token, TRX. The price of the digital asset dropped from $0.078 to $0.061. Therefore, a drop of almost 22% in a few hours.
Considering the period of the last 24 hours, the devaluation is around 18%. At the time of writing, TRX is priced at $0.060.
Quickly, Justin Sun took to his Twitter account to report on the steps that Tron’s Decentralized Autonomous Organization, Tron DAO, was taking to regain USDD parity with the dollar.
According to Sun, the DAO injected 700 million USDC, a stablecoin issued by Circle, to keep USDD pegged to the US currency.
700 million USDC has been injected into @trondaoreserve for #USDD peg. Well done! https://t.co/r11PnBte4g
— H.E. Justin Sun 🅣🌞🇬🇩 (@justinsuntron) June 13, 2022
As reported by the DAO tweet shared by Sun, with the new injection the USDD collateralization rate was almost 300%.
Soon after, DAO informed who deposited another 100 million USDC on Binance to buy more TRX. However, the efforts of Sun and Tron DAO were not enough for the stablecoin to recover the target price of $1.
It is worth noting that for weeks Sun and Tron DAO have been preparing for potential market turmoil. That’s because after Terra’s UST collapsed, its USDD stablecoin project – similar to Terra’s – was in jeopardy.
Last Saturday, for example, Tron DAO Reserve said it bought $50 million worth of BTC and TRX for the reserves.
Sun pledges $2 billion to “save” TRX
The founder of the Tron network also said on Twitter Monday that the Tron DAO would dedicate $2 billion to combat short selling, which allows for speculation in the fall, to preserve TRX.]
“I don’t think they can last even 24 hours. The short squeeze is coming,” Sun wrote.
A short squeeze occurs when traders who are betting on the downside are forced to close out their positions by buying back the underlying token. Sun noted that the so-called funding fee for selling TRX on Binance has reached 500%.
