Limitations of Tron USDD
Last week we told you that Tron’s USDD stablecoin, which runs on an algorithmic system, feared meet the same fate as the MTS of Terra. Recall that initially these two “stable” cryptocurrencies should have maintained a price of 1 dollar thanks to a “burn” mechanism. For USDD, this is based on TRX, the native currency of the Tron network.
If this system looks familiar, it’s not for nothing, it was inspired by, or even simply copied, from Earth, and therefore can potentially encounter the same pitfalls. To avoid this, the project teams announced last week which were adding USDC 700 million to the USDD reserve to avoid loss of anchor.
But flaws had already been noted. USDT used in conjunction with USDC to support the stablecoin have been deposited on JustLend to generate returns. Furthermore, the drop in prices has a direct impact on the reserve, which mechanically loses value. Which therefore feed the suspicions, which seem for the moment to prove to be well founded.
👉 To go further – What is Tron (TRX)?
Tron’s USDD still under $ 1
Indeed, a week later, the USDD has not yet re-established parity with the dollar, far from it. According to aggregated data from CoinGecko, Tron’s algorithmic stablecoin is in trouble today about $ 0.96after dropping to $ 0.93 two days ago:
USDD fails to come close to the $ 1 value
If we go to the Twitter account of Tron DAO, we notice that the tweet pinned is always the same since June 17th. To the question”It is USDD depegging ? “, 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 for this “depeg” will be found. Yesterday, a concise message from Justin Sun informed the community that Tron’s DAO stash had purchased 10 million USDD for “protect the blockchain industry as a whole and the cryptocurrency market“.
Yet, for now, USDD is always worth less than a dollar. If it succeeds in re-establishing parity, it will therefore have to face a colossal new task: to regain the confidence of investors particularly burned by the Terra deal.
👉 To read on this topic – South Korea: Terra developers no longer have the right to leave the territory
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