Tron's Justin Sun Is 'Deploying More Capital' To Halt Decline Of USDD Stablecoin

Zinger Key Points
  • Tron's USDD stablecoin dropped to its lowest level since June.
  • Last month, the algorithmic decentralized stablecoin, based on Terra's now-defunct UST, lost its dollar peg.
  • As USDD dropped to $0.97 on Monday, Justin Sun posted a meme mimicking a tweet by Terra's Do Kwon.

Tron founder Justin Sun announced on Monday he swapped nearly $773,000 worth of Tron’s native stablecoin USDD/USD.

Sun imitated Terraform Labs CEO Do Kwona's tweet from just before Terra's bankruptcy in May by writing, "Deploying more capital—steady lads."

Sun shared transaction data for the USDD stablecoin, which showed him exchanging more than $203,000 in USDC/USD and $570,000 in USDT/USD.

USDD, which is typically indexed to the value of the dollar, has been trading below $1 since the end of October.

Also Read: Cathie Wood's Ark Invest Adds Coinbase Stock As Crypto Exchange's Price Hits All-Time Low

On Monday, USDD nose-dived to reach its all-time low of $0.97.

Following Sun's significant swap, CoinGecko data now indicated USDD was trading at $0.98.

With a market capitalization of $711 million, USDD is the eighth-largest stablecoin.

This is a far cry from the market leaders USD Coin and Tether, the latter of which has a market value of more than $65.7 billion.

What is Tron’s USDD?

Decentralized stablecoin USDD from Tron was originally going to follow Terra's UST's mint-and-burn design, 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/USD tokens to produce extra USDD stablecoins.

A similar mechanism was used by UST, where users may create extra UST by burning the native LUNA/USD token of the network.

According to the project's whitepaper, Tron asserted USDD was overcollateralized, supported by Bitcoin BTC/USD, USD Coin, TRX and other "highly liquid" tokens.

According to USDD, the number of tokens supporting the stablecoin is likewise 200% overcollateralized.

Still, this hybrid strategy did not seem to be inspiring much confidence in investors given the stablecoin's protracted period of de-pegging, which included today's new low.

Next: Justice Department Considering Criminal Charges Against Binance Founder Changpeng Zhao: Report

Photo: Satheesh Sankaran via Shutterstock

Posted In: CryptocurrencyNewsTop StoriesMarketsDo KwonJustin SunTerraform LabsTRONTron DAO
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...