A new Terra? Tron’s USDD still hasn’t regained parity with the dollar June 21, 2022 by admin Limitations of Tron USDD
Last week, we tell you that Tron’s stablecoin USDD, which works with an algorithmic system, feared to meet the same fate as Terra’s UST .As a reminder, these two “stable” cryptocurrencies were originally supposed to maintain a price of 1 dollar thanks to a “burn” mechanism.For USDD, this relies on TRX, the native currency of the Tron network.
If this system seems familiar, it’s not for nothing, it was inspired, even simply copied, from Terra, and it can therefore experience the same pitfalls.To avoid this, the project teams had announced last week that they were adding 700 million USDC to the USDD reserve to prevent loss of anchorage.
But already, flaws had been noted.USDT used alongside USDC to back stablecoin were deposited on JustLend to produce yield.In addition, the fall in prices directly impacts the reserve, which mechanically loses value.What fed the suspicions therefore, which seemed for the moment to relate justified.
👉 To Go Longer – What is Tron (TRX)? Tron’s USDD Still Below $1
Indeed, a week later, the USDD has still not re-established parity with the dollar, far from it.
According to data aggregated by CoinGecko, Tron’s algorithmic stablecoin is struggling today around $0.96 after falling as low as $0.93 two days ago: USDD fails to approach the value of 1 dollar
If one goes to the Tron DAO Twitter account, one will note that the pinned tweet is still the same since June 17th.At the question “ Is USDD depegged ? “, he answers :
“ No.USDD is a decentralized stablecoin that relies on an on-chain mechanism and collateralized assets, unlike centralized stablecoins like USDC.
»
No other explanation of this “depeg” will be found.Yesterday, a terse message from Justin Sun informed the community that Tron’s DAO stash had bought 10 million USDD in order to “ protect the blockchain industry as a whole and the cryptocurrency market “.
Still, for now, USDD is always worth less than a dollar .If he manages to restore parity, he will then have to tackle a colossal new task: to regain the confidence of investors who have been particularly burned by the Terra affair.
👉 To read on this subject – South Korea: Terra developers no longer have the right to leave the territory
Source: CoinGecko
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