The USDD algorithmic stablecoin price has decoupled from the U.S. dollar, however, TRON Foundation structures are taking prompt action.

USDD Loses Peg to Dollar, TRON Takes Action

The USDD algorithmic stablecoin price has lost parity with the U.S. dollar. The initial de-linking occurred on Monday, June 13, as the price of BTC dropped to its lowest level in 18 months and the general decline of the cryptocurrency market followed. At that time, the price of USDD fell to $0.98. 

In response to the fall of TRON, DAO Reserve announced the addition of 700 million USDC to the stabilization fund to strengthen the parity of USDD and USD. Thus, the amount of collateralization of the total stablecoin was 280%. However, the decoupling continued and on June 14, the price of USDD was down to $0.97.

Against this background, cryptocurrency exchange Upbit warned about the risks of price fluctuations for cryptocurrencies WAVES and TRON (TRX) due to the loss of Neutrino USD (USDN) and USDD algorithmic stablecoins pegged to the dollar. The price of USDN has now fallen to $0.96. 

The list of stablecoins at risk of losing their dollar peg, according to Upbit, also includes: 

  • USDX, based on the Kava Network; 
  • USN protocol NEAR; 
  • Hive Dollar (HBD).

According to Upbit analysts, the reason for the destabilization of the rate of algorithmic stablecoins is due to a sudden change in the collateral value of the underlying assets or the incorrect operation of their algorithms. 

However, judging by the information on the project’s official portal, the USDD stablecoin has more than 300% collateral for its value. On June 11, TRON DAO Reserve bought BTC and TRON tokens for a total of $50 million to secure USDD. USDD has a total monetary value of approximately $723.3 million, with the market value of the funds with which the stablecoin is secured exceeding $2 billion. 

Nevertheless, on June 15, the price of USDD momentarily fell to $0.95. Given this fact, there was a report that the TRON DAO Reserve has withdrawn 2.5 billion TRX from Binance accounts. Earlier, Justin Sun, TRON Foundation CEO, announced such actions in order to take measures to protect the native token project TRX from the actions of traders who open short positions. Justin’s strategy is to trigger a short squeeze, a situation in which traders who open short positions are forced to close them by buying back the underlying token. 

As of 15:00 (GMT+3), the USDD stablecoin is trading at $0.97. The stablecoin was only recently launched on May 5. The asset’s algorithm largely repeats the TerraUSD (UST) “stablecoin” model, the collapse of which became evident on May 9. The situation with TerraClassicUSD — the name the coin got after the “reboot” of the Terra project — caused doubts in the cryptocurrency community about the stability of stablecoins. Even the largest stablecoin Tether (USDT) shook, which, however, was able to return faith in its stability to holders of the asset, exchanging about $300 million per day at a rate of 1:1 USDT directly through the project’s website.

Author: Evgeny Tarasov
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