USDD USDD/USD, Tron’s stablecoin, has failed to maintain its $1 peg for the past week, floating between 92 and 98 cents.
What Happened: USDD acts as an algorithmic stablecoin that in the past month has been collateralized with reserves worth $2.35 billion, constituting Bitcoin BTC/USD, Tron TRX/USD and Tether USDT/USD, holding a collateral ratio of 324.97%.
On June 13, USDD lost its dollar peg, falling below the $1 mark, and has not regained its peg.
On June 19, the stablecoin reached an all-time low of $0.925. The Tron DAO responded to the question of whether USDD is de-pegged on June 17, stating: ”No. USDD is a decentralized stablecoin that depends on an on-chain mechanism & collateralized assets, unlike centralized stablecoin e.x. USDC, which is attached to USD in a very close spread by banking mint and redemption.”
Since its inception, USDD has been issued on Tron’s chain alongside Binance’s Binance Coin BNB/USD and Ethereum’s ETH/USD chain.
The token’s smart contracts, algorithmic nature, and collateralized reserves are meant to safeguard its dollar peg.
The ongoing price of USDD remaining under $1 has sparked worries across the crypto space.
Why It’s Important: Following the recent crash of Terra LUNA/USD as a result of its algorithmic stablecoin UST UST/USD being de-pegged, there is major fear, uncertainty, and doubt surrounding stablecoins and their reliability. Tron, led by founder Justin Sun, has endeavored to scale the blockchain with large-scale funds.
The ecosystem has a total value locked (TVL) of almost $4 billion distributed across nine DeFi protocols. The DAO has also ensured to inject funds whenever necessary to create strong collateralized reserves, with the current collateral ratio at 324.97%.
Despite endeavors to protect the token against short sellers and plunging market prices, Tron’s stablecoin has continued to remain under its dollar peg.
The Tron DAO remains confident and deems this range of volatility to be normal for the stablecoin given its decentralized nature.
The Last Word: As uncertain market conditions continue, it is crucial for the Tron DAO and community to protect its stablecoin from falling further.