USDD Lost Its Peg And Justin Sun Promised To Use $2 Billion To Make The Incident Better
On Monday, the Tron network‘s stablecoin, USDD, lost its peg to the US dollar, plunging as low as 91 cents, as crypto markets plummeted as investors were increasingly anxious about stubbornly rising inflation.
The funding rate on the Binance exchange for betting against, or “shorting,” the Tron blockchain’s native TRX coin was decline 500% on Monday, a staggering pace that shows many investors are yearning to get into the trade. TronDAO would “deploy $2 billion to fight them,” according to Sun.
In a tweet, TronDAO said that it has added $650 million in USDC to its reserve.
USDD is an algorithmic stablecoin on the Tron blockchain, a multipurpose smart contract network that aims to maintain a one-to-one exchange rate with the US dollar. It relies on a complex, automated balancing process that includes producing and deleting USDD and TRX units in a cycle.
It is also collateralized by the TronDAO reserve, which holds cryptocurrencies such as TRX, bitcoin (BTC), and other stablecoins like as Tether’s USDT and Circle’s USDC.
Its concept is remarkably similar to Terra’s stablecoin, UST, which recently lost its price peg and plummeted, wiping away $40 billion in market value.
Cryptocurrencies fell dramatically on Monday when Celsius, a crypto lender, declared that all withdrawals and transactions had been halted to prevent a deposit run. It’s the latest symptom of a crypto liquidity crisis, fueled by a deteriorating global economic climate and central banks raising interest rates and draining excess liquidity from the financial system in an effort to combat stubbornly rising inflation.
On the crypto market KuCoin, the USDD plunged as low as 91 cents on Monday morning, signifying a 9% loss from its purported peg.
According to the official TronDAO website, USDD’s collateral is valued at $2 billion, while the stablecoin’s supply in circulation is $723 million, implying that it has enough funds to acquire USDD with reserves.
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