Tron Price Shoots Up 24% As USDD Keeps Declining
From the beginning of this week, the cryptocurrency market has fallen precipitously. While the market is showing signs of improvement, losses are still being felt, with projects such as the USDD stablecoin experiencing a significant drop from its $1 peg.
Despite the fact that the USDD is considerably below its index, TRON’s native token, TRX, has risen dramatically in the last 24 hours. The gains are the result of the TRON DAO Reserve’s efforts to keep the USDD peg.
Tron DAO’s Effort to Save USDD Peg
Justin Sun, the inventor of TRON, is devoted to guaranteeing that the USDD stablecoin does not face the same fate as the defunct Terra UST stablecoin. Sun has promised that the USDD stablecoin peg would be restored, which appears to be helping TRX’s value.
On Wednesday, the TRON DAO Reserve set aside $220 million for buying tokens of TRX on the Binance exchange. Sun still has $280 million in cash that may be used to defend the peg.
The USDD algorithm is comparable to the now-defunct Terra UST. Short sellers are presently targeting the stablecoin, causing its value to fall to roughly $0.97. The USDD depeg is the result of a market-wide selloff, and with TRX prices falling, USDD has suffered as well.
The TRON DAO Reserve donated $100 million in USDC stablecoin to the Binance market on Wednesday. TRX was purchased with the cash. After a few hours, the foundation allocated another $120 million to maintain TRX’s upward trajectory.
The Reserve has received an additional $500 million to protect the peg. The Reserve seems to be doing something beyond simply purchasing TRX. It had previously announced the withdrawal of 2.5 billion TRX from Binance in order to defend the whole blockchain sector and cryptocurrency market. These measures have aided in the preservation of TRX’s value but have done nothing to support the USDD peg.
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USDD Continues To Decline
Despite Sun and the TRON DAO Reserve’s attempts to keep the USDD stablecoin linked to the $1 value, it has nonetheless depegged. The stablecoin was selling at a 4% discount at $0.96 at the time of writing.
Sun has already said that USDD is not the same as the defunct Terra UST cryptocurrency. After the Luna Foundation Guard was unsuccessful in maintaining the peg, UST crashed in early May. The DAO Reserve, on the other hand, has argued that the USDDD is over-collateralized, lessening the danger of depegging. The USDDD collateralization ratio is at 314%.
Owing to the unstable nature of the crypto market, the DAO Reserve’s efforts to safeguard the USDD peg may not be functioning as planned. With most cryptocurrencies losing value, selling pressure on TRX and USDD is increasing.
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