News
Fear of a Repeat! TRON’s USDD Stablecoin Remains Below $1 Amid Continuing Crypto-Market Volatility
15/06/2022
Highlight
- USDD has traded below its peg since June 13, 2022, and has yet to recover
- TRON DAO injected another $2 billion into the system to support USDD’s $1 peg and fight Short Sellers in the market
- However, USDD has remained unable to return to its peg for more than 24 hours
Just 40 days after the launch of USDD, the Stablecoin’s value began to experience volatility. The coin’s Algorithmic Stablecoin mechanism lost its peg and fell below $1 on June 13. During the same period, total crypto Market Cap plunged below $1 trillion for the first time since January 2021. TRON DAO’s attempt to stabilize the situation involved injecting $2 billion into the system to support USDD after it lost its Peg.
Investors seeking to profit from Arbitrage between USDD and TRX created enormous selling pressure on TRX. USDD lost value below its Peg, affecting the value of TRX and sending its price down as much as 16.7%, its lowest level in two months.
Source : https://decrypt.co/price/tron
Binance’s Funding Rate fell as low as negative 500% (APR), indicating that many investors had opened short positions in futures markets to profit from an expected decline in value. Although TRON DAO injected another $2 billion into the system, it appears to be purchasing large amounts of TRX to create a short squeeze and allow Arbitrage activity to help restore USDD’s value. This strategy carries significant risks. In addition, if the price of TRX cannot recover, TRON DAO will need to inject even more funds into the system to keep USDD from losing its Peg.
According to the TRON DAO RESERVE website, TRON DAO holds various assets as reserves, including more than $10.8 billion worth of TRX, 14,040 bitcoins, 140,000,000 USDT, and 1,000,000,000 USDC. This represents a collateralization ratio of approximately 312% against $723,321,764 in the system.
Source: https://tdr.org/
Sources:
https://decrypt.co/102840/trons-usdd-stablecoin-slips-from-dollar-peg-amid-crypto-market-crash
https://cryptobriefing.com/trons-usdd-stablecoin-still-below-1-despite-2b-cash-injection/
https://coinmarketcap.com/currencies/tron/
https://decrypt.co/102840/trons-usdd-stablecoin-slips-from-dollar-peg-amid-crypto-market-crash
https://tdr.org