Peg Tron to Deploy dollar2 Billion to Stabilise Broken USDD Stablecoin
Categories: Crypto News US
Tron to Deploy dollar2 Billion to Stabilise Broken USDD Stablecoin Peg
USDD lost its US dollar peg on June 13, dropping as low as US$0.91 on the KuCoin exchange.Many investors now fear the Tron ecosystem may follow in the wake of Terra, which spectacularly collapsed last month after its algorithmic stablecoin, UST, suddenly and dramatically depegged. At the time of writing USDD had still not regained its peg. CoinGecko was reporting its price as US$0.98.
USDD Over-Collateralisation Fails to Prevent Depegging
The launch of USDD was first announced in April, just days before UST began to lose its peg.In the wake of the Terra collapse, Tron announced USDD would become an over-collaterised stablecoin – that is to say that each USDD would be backed by more than US$1 in assets held in the Tron DAO Reserve. This move was intended to shore up investor confidence in the new stablecoin and to prevent the kind of depegging event we are now witnessing.
Sun Confident USDD Will Recover Peg
In his tweet about the depegging of USDD, Sun indicated that the massive shorting of TRX was the cause and he believes the deployment of US$2 billion to protect TRX will be enough to swiftly restore USDD’s peg.Although Sun’s big talk may appease some Tron diehards, it likely won’t comfort the broader market. The Terra-based algorithmic stablecoin experienced a similar ‘minor wobble’ the day before it depegged catastrophically, with no amount of spending by the Luna Foundation Guard, the Terra equivalent of the Tron DAO Reserve, sufficient to save it.