Justin Sun’s Stablecoin USDD is Showing Signs of Depegging
A month after the launch, the stablecoin of Justin Sun’s Tron DAO, USDD, started to stumble and depeg. Introduced on May 5th this year, the current value of the coin, as of writing, is at $0.983, a -1.1% decrease according to data aggregator CoinGecko.
Depegging means the value of a stablecoin is slowly moving away from its supposed “peg”. For example, the cryptocurrency USDD should always have a value of $1, but depegging means the value of the cryptocurrency is moving away from $1.
Although the coin is holding up its value it is still a cent short of a dollar which USDD should have a parallel worth.
Justin Sun, Tron CEO, explained that the firm is “actively buying crypto” to manage the stablecoin.
“Tron DAO is actively buying crypto as you know in the past few days (the market is very volatile). We will add reserves into (the) public address once (the) market is stable. Furthermore, #USDD return rate will refresh every day.” –Justin Sun
Moreover, Sun announced that they have further purchased 650 million USDC bringing their total to $2.5 billion.
During their launch, the CEO promised to over-collateralize USDD to the tune of $10 billion dollars. However, TRON’s total reserves in all currencies still haven’t reached the goal. USDD is collateralized by TRON (TRX), Tether (USDT), USD Coin (USDC), and Bitcoin reserves.
Sun also assures that the “proper algorithms” that Tron employed would help to ensure the peg remained stable “regardless of market volatility.”
This isn’t the first time a supposed stablecoin has crashed and depegged, Terra blockchain’s algorithmic stablecoin USTC depegged last month; at the same time its cryptocoin Luna also collapsed. This event wiped out billions from the tokens’ market value leaving several investors and holders with huge losses. (Read more: What happened to USDT, UST, and LUNA)
These crypto crashes have further increased the sense of fear that people feel right now towards crypto. However, Miguel Cuneta, the co-founder of Bangko Sentral-licensed crypto company Rebittance, stated that although the crypto market has been in a “bloody global trend” for the past months, the crypto community will still prevail as “it all boils down to the fundamentals of the technology behind Bitcoin and blockchain.” (Read more: Crypto to Thrive Amid Bear Market, Says Co-Founder of BSP-Licensed Rebittance Inc)
This article is published on BitPinas: Justin Sun’s Stablecoin USDD is Showing Signs of Depegging
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.