Amid Monday’s crypto market crash, tronThe recently launched algorithmic stablecoin USDD has lost its dollar peg, falling as low as $0.9764, according to data from CoinMarketCap.
At the time of publication, USDD is yet to recover its dollar peg, with its price hovering around $0.98.
According to Tron founder Justin Sun, the de-pegging of USDD was caused by a large number of short sellers targeting the network’s native token TRX on the crypto exchange. Binance, He added that the Tron DAO Reserve will pledge up to $2 billion to fight short sellers.
“The funding rate for TRX shorting on Binance is negative 500% APR,” Sun tweeted on Monday. ,[Tron DAO Reserve] Will deploy USD 2 billion to fight them. I don’t think they can even last 24 hours. [A] Short squeeze is coming. ,
A short squeeze occurs when traders are betting on the price of an asset to go down, but instead the price goes up, forcing them to close the position.
TRX fell more than 16% to a two-month low of $0.58 on Monday, before returning to its current price of $0.60, down 5% on a daily basis, according to CoinMarketCap.
What is USDD?
USDD is an algorithmic stablecoin, a type of cryptocurrency pegged using another asset (usually a fiat currency such as the US dollar). smart contract Algorithm
Different stable coins such as tie rope or of the circle USDCUSDD was not initially backed by any reserves, instead maintaining its dollar peg through arbitrage trading between USDD and TRX, the native token of the Tron network.
However, after a similar algorithmic stablecoin, Terra’s UST, collapsed last month, wiping away $60 billion in investor assets in just one week, USDD changed its operating model to include collateral. Bitcoin (BTC), TRX, USDT, and USDC Reserve.
The team behind USDD also promised a minimum collateral ratio of 130%, which would be higher than the 120% collateral ratio maintained by MakerDAO. Midwife stable currency
On Monday, the Tron DAO Reserve announced a slew of measures to “protect the overall blockchain industry and crypto market.”
It consists of two separate purchases of USDC 100 million each (Here And Here), afterwards . another purchase of 650 million UDSCWhich increased the supply of USDC on TRON to a total of $2.5 billion.
According to the website of Tron DAO Reserve, the collateral ratio of the stablecoin is currently around 248%.
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