Panic in the Crypto Space as Tron’s USDD Stablecoin Lost Its USD Peg Value

June 13, 2022

Reading Time: 2 minutes

The crypto community is yet to recover from the collapse of Terra’s UST and its native token, Luna as another wave of stablecoin collapse is hitting the crypto space again today, this time, it is Tron’s USDD.

Earlier today, Tron’s Justin Sun broke the de-peg news on Twitter, however, this distribution in the USDD market was as a result of the negative funding rate for TRX shorts on Binance which summed up to -500% APY. Due to this, Tron’s algorithm stablecoin, USDD, experienced a little de-peg from the USD. As of writing this, there is about a 1.5% drop of USDD value and it is currently trading at $0.9888.

Tron to Use $2 Billion in its Reserve For Recovery Attempt

In Tron’s Justin response to panic traders, Justin noted that the issue will be attended to and be resolved as soon as possible, he posited that the de-peg will not even last for 24 hours. According to Justin, Tron would use $2 billion in TronDao reserves to fight the Binance shorts fundings rates and facilitate the USDD re-peg.

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$700 Million already Injected

As part of the $2 billion set aside to fight the de-peg in the TronDao reserve, $700 million worth of USDC had already been deployed.

While writing this, USDD is trading close to $0.99 compared to its earlier de-peg value of $0.98.

Tron’s USDD algorithm stablecoin has been under intense scrutiny since the Terra event. However, Tron’s response to this event looks like the occurrence of this event had already been prepared for.

With another de-peg wave in the crypto community, the justification of traders losing trust in algorithm stablecoins in the crypto space is becoming more relevant.

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