Tron’s stablecoin USDD still struggles to maintain its 1:1 exchange rate with the US Dollar further, even as the overall crypto market regains its footing from the FTX aftermath. Today saw Tron network’s algorithmic stablecoin drop to $0.9695, which is its lowest since June 22. This violates DAO’s 3% price fluctuation threshold normally considered to be de-pegs.
As of article release time, USDD holds 82% of the USDD/3CRV pool reserves under Curve Pool DeFi protocol. This imbalance may be attributed to users swapping USDD for its other components DAI, USDT and USDC. USDD has had an advantage on November 14, spiking to $1.04, but this value immediately fell to below $1 later on.
In response to this, Tron founder Justin Sun has tweeted that he has deployed more capital: roughly $773,000 has been swapped from USDC & USDT for USDD, while also claiming that USDD is 200% overly collateralized by other digital assets. CoinGecko reports that USDD stands at $0.98 after his swap action.
To note, other stablecoins like USDT has also wobbled after the FTX fiasco, but has since regained their peg quickly as compared to USDD.
USDD was initially going to adopt Terra’s UST’s mint-and-burn structure, but it was changed after Terra’s failure when USD lost its dollar peg. The Tron DAO Reserve’s whitelisted members can now burn native TRX tokens to produce extra USDD stablecoins. A similar mechanism was used by UST, where users may create extra UST by burning the native LUNA token of the network.
