After Monday’s crypto market carnage, crypto prices saw some improvement the next day. However, Tron’s stablecoin USDD fell again to $0.974 per unit, indicating that a small amount of instability continues to plague the fiat-pegged token. It fell to $0.97 after deviating from parity on Monday, and after the Tron DAO reserves deployed large amounts of USDC to shore up reserve defenses.
Tron’s USDD Stablecoin Continues To Stay Below $1 Parity, Tron DAO Reserve Deploys $500M USDC
Many cryptocurrency proponents are paying close attention to Tron’s stablecoin USDD following the events within the Terra blockchain ecosystem. On June 13, the algorithmic stablecoin fell to $0.977 per unit, while the cryptocurrency market suffered extreme losses throughout the day.
The price of Bitcoin (BTC) dipped below $21,000 in late Monday trading hours and remained above its 2017 all-time high. Crypto prices improved slightly on Tuesday, but USDD remained below $1 parity.
For the current market extreme, @trondaoreserve received another $500M USDC to defend the #USDD peg. Now the collateralization rate of USDD is 310%. https://t.co/3ZdRvCB0rD pic.twitter.com/z0PXqPXKhu
— TRON DAO Reserve (@trondaoreserve) June 14, 2022
At the time of writing, the USDD exchange was valued between $0.978 and $0.98 per unit, but fell to a low of $0.974253 per token on Tuesday. The most recent low was slightly less than the previous day’s decline and occurred at 3:45 a.m. ET on Tuesday.
The drop came after the Tron DAO reserve decided to deploy millions of dollars in USDC to defend the token’s $1 parity. “In order to protect the entire blockchain industry and the crypto market, the Tron DAO Reserve has increased the supply on TRON by 650,000,000 USDC,” the organization explained. “Current USDC supply on TRON has reached $2.5 billion.”
USDD is concerned because it is similar to Terra’s former stablecoin UST, which decoupled slightly a day before it plummeted to $0.704 per unit on May 9, 2022. On Tuesday, Tron founder Justin Sun tweeted about the USDD movement against Tether (USDT).
“2pool has returned to a 55/45 balance,” Sun said. “I believe it will be back to 50/50 within 24 hours [a] 247% mortgage rate.You might see the fear here, but I see [a] 2% profit opportunity. Sun also shared data related to stablecoin trading volume on the Tron network on June 13.
Currently, at 7:30AM ET, the Tron DAO Reserves webpage shows that the reserve has a collateralization ratio of 246.26%. At the time of writing, this is roughly $1,781,291,610, while the number of dollars in circulation today is $723,321,764. Collaterals backing the USDD peg include tron (TRX), as 10.87 billion TRX is held, and 14,040 bitcoins (BTC).
The reserve also holds 140 million USDT, and 500 million USDC is also recorded in the Tron DAO reserve ledger. Tron DAO reserve statistics show that other stablecoins are pledged by 100% reserve, while DAI is over pledged by 120%. The website highlights that USDD has much higher collateral compared to other stablecoins on display.
Tron DAO Reserve Deploys $500M to Defend Stablecoin Peg at 8:40AM EST
The defi protocol called Justlend offers 20% APY, similar to what Terra defi app Anchor once offered, and is Tron’s largest defi app today, with a total value locked (TVL) of $2.36 billion. Tron’s entire TVL is $4.55 billion, which means Justlend’s dominance today is 51.86%. Despite the recent market rout, Justlend’s TVL has grown more than 33% over the past 30 days. With the dollar falling to a low of $0.974, a $100 investment would only be worth $97.40.
After the price of USDD fell to $0.97 again, the Tron DAO reserves deployed another $500 million to defend the peg, and by 8:40 a.m. ET on Tuesday, collateral support was at 310%. “For the current market extremes, [the Tron DAO Reserve] Another $500 million in USDC has been received to defend the USDD peg. USDD is now collateralized at 310%,” Tron DAO Reserve tweeted.
What do you think of Tron’s stablecoin USDD falling to $0.97 per coin? Let us know what you think about this topic in the comments section below.
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