While the extreme decline in the crypto markets continues, the Tron network USDD stablecoin lost its stable value against the dollar. The loss of the dollar fixed, on the other hand, created fear in the community.
The algorithmic stablecoin USDD on the Tron network lost a little of its 1 dollar fixed value against the dollar and regressed to 0.97 dollars, accompanied by fear and speculation in the crypto markets.
The founder of the TRON network, Justin Sun, responded instantly to the loss and shared a tweet. In the shared tweet, he stated that TRON DAO will distribute ‘$2 billion’ to protect TRX from the financing rate of the shorting on Binance. A different tweet was shared in which 700 million USDC was ‘injected’ to keep USDD stable.
After this intervention, the price of USDD rose to $ 0.98, but this rise was not enough to dispel the current speculation and fears. The biggest reason for this fear was a big downtrend in the markets in the last few days. After the downtrend, for the first time since January 2021, the total market cap fell below $1 trillion. At the time of this news, the total value was around $963,631,828,196 ($963,631 billion), according to CoinMarketCap data.
The native token of the Tron network, on the other hand, reacted negatively to this intervention and suffered a 16% drop in unit value.
UST-Terra Fear Covers USDD!
The great collapse of UST and LUNA last month still continues to scare. After the collapse, $ 18 billion worth of value was wiped out. The stablecoin of the algorithmic stablecoin UST against the dollar recorded a big drop, falling as low as 35 cents on May 9.
The biggest reason why there is no such great fear on the USDD front is that the algorithmic stablecoin has a 1-to-1 ratio of BTC, TRX, etc. against the dollar. It is backed by stablecoins such as USDC, USDT, TUSD, USDJ as well as crypto assets. This collateral allegedly makes USDD the first over-collateralized cryptocurrency by 280%, according to data on Tron’s official website.
However, a lot of speculation is also swirling about the over-collateralized nature of USDD. A researcher from ProximityFi, aka Resdegen on Twitter, expressed concern, stating that based on the available data on USDD collateral, USDD is not over-collateralized – only 92%.
Last month USDT and DEI, stablecoins pegged to the dollar, experienced similar turbulence and temporarily lost their pegs against the dollar. While USDT remains strong, DEI has failed to recover and is currently valued at $0.61 according to data from CoinMarketCap.
You can follow the current price action here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.