USDD Stubbornly De-pegged Despite Tron DAO Reserve Sinking Billions Into It

Tron’s USDD stablecoin is still below the expected 1:1 ratio with the USD despite Justin Sun striving relentlessly to stabilize it.

Several days ago, Tron’s stablecoin, USDD, encountered a tumultuous market shift that pushed it to de-peg from the US dollar. Stablecoins are designed to have a value that is equal to the USD but in form of crypto to facilitate easier cryptocurrency swaps on exchanges. It now seems like USDD is failing at accomplishing this role.

After the de-peg, Tron DAO Reserve moved quickly trying to bring the token back up. It withdrew around 2.5 billion TRX from exchanges aiming to increase the USDD collateral and prevent more price falls of the stablecoin. Nevertheless, it appears like all these efforts are yet to bear any fruits.

At the time of publication, USDD is valued around $0.97, based on data published by CoinMarketCap.

More Than 320% Collateralization

Tron DAO Reserve kept moving to calm the Tron community as panic now grips TRX and USDD holders. Investors seem worried that the Tron ecosystem may end up like Terra. Several weeks ago, the Terra ecosystem crumbled, resulting in a massive fall of Luna and UST prices to below zero.

In a recent Twitter update, Tron DAO Reserve aimed to answer some hard questions about USDD and how the firm expects to resolve the current challenge. Interestingly, USDD has more than 320% collateralization, meaning that the coin is still in a safe zone despite the current price volatility. Having adequate collateral means that it cannot drop to reach a liquidation point.

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Currently, USDD has over 320% collateralization rate with USDC 1,080,000,000 / TRX 10,874,566,176 / BTC 14,040.6 / USDT 140,013,886.

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

“Currently, USDD has over 320% collateralization rate with USDC 1,080,000,000 / TRX 10,874,566,176 / BTC 14,040.6 / USDT 140,013,886.”

Things To Normalize For USDD In A Few Days

Moving on, Tron DAO Reserve stated that USDD will get back to its normal levels within the coming several days. That might be taken to mean that the injected funds and collateral are yet to make any considerable impact. So far, Tron has already allocated nearly 5.5 billion TRX to stabilize USDD.

Several hours ago, Tron DAO injected another $300M USDC aiming to protect Tron and USDD. But after all these efforts, the USDD is still depegged.

To safeguard the overall blockchain industry and crypto market, TRON DAO Reserve have increased 300,000,000 #USDC supply on #TRON. Currently USDC supply on TRON has reached $2.8 billion.

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

Since USDD has a small market capitalization than Terra USD (UST) so there are possibilities that Tron DAO can maintain its 1:1 peg with the dollar. However, the most worrying thing is that despite all these relentless efforts, Tron stablecoin is still nearly 4% down and what if Tron DAO stops injecting funds or lacks the funds to support the de-pegging, in such a scenario the results would be severely catastrophic.