Tron’s USDD Stablecoin Hasn’t Managed To Recover Its Dollar Peg

Tron’s USDD stablecoin hasn’t managed to recover its dollar peg after a week of trading below the dollar level and still has to reclaim parity with the greenback as we can see further in our latest Tron news.

Tron’s USDD stablecoin traded under a dollar for a week now, after slipping below the dollar peg on June 13. USDD hit an all-time low of $0.9255 before recovering to $0.9608 at the time of writing. It remains a few cents shy of $1 which is the value that it is intended to be traded at. On June 17, the Tron DAO Reserve claimed that USDD is not depegged:

“USDD is a decentralized stablecoin that depends on an on-chain mechanism & collateralized assets.”

(1/8) Q&A about #USDD

1. Is USDD depegged?

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.

— TRON DAO Reserve (@trondaoreserve) June 17, 2022

It goes without saying that USDD differs from centralized stablecoins like Circle’s USDC and is not being attached to the dollar in a close spread by banking mint and redemption. According to Justin Sun, the Tron founder, USDD initially depegged as a result of the short-sellers targeting the network’s TRX token on Binance. Despite Sun pledging $2 billion from Tron’s DAO Reserve to fight the short sellers and SUDD remained below the dollar. The Tron DAO reserve announced that it purchased 10,000,000 USDD in a bid to safeguard the blockchain industry and the entire market.

Initially launched as an algorithmic stablecoin, the operating model was changed after Terra’s algorithmic stablecoin collapsed last month. The stablecoin uses a hybrid model which is backed by collateral including TRX, USDT, and Bitcoin as well as USDC reserves. The total value of all USDD coins issued by Tron is over $723 million and the DAO Reserve’s website stated that the currency has a backing ratio of 324% backed by $2.3 billion in collateral.

The Tron ecosystem is the third biggest blockchain by TVL with less than $4 billion locked into smart contracts on nine different decentralized finance protocols. Its TVL surged in mid-November of last year at $6.75 billion and hit $6.29 billion and dropped by 36% to $4 billion in two weeks amid the market crash. Tron’s TRX token is now trading at $0.061 down by 1% in one day and over 20% in the past week:

“We foresee a very robust future ahead. We’re only 42 days old, we still have numerous products to build and massive growth ahead.”