TRON in crisis: Network’s stablecoin lost its support to the dollar

Shortly after the disaster with TerraUSD, the stablecoin that lost its support in the dollar, a very similar situation is beginning to form on the TRON blockchain, with the team behind the project in crisis mode to try to mitigate a major damage that could can add up to the cryptocurrency ecosystem.

The Tron blockchain stablecoin, U.S. DOLLAR, which is an algorithmic stable currency has been showing a very worrying situation since last Monday.

In the past three days, the currency has failed to maintain its support for the dollar, meaning it is trading below the value it should be at.

USDD price far below the assumed 1:1 value with the dollar. Source

With this scenario, investor concerns are clear as, as was the case with the UST, it could spell a collapse not only for the stablecoin market, but also for Tron (TRX), which could lose market confidence after this scenario fails.

The loss of ballast seems to coincide with a change in the stability algorithm model. Recently, possibly as a result of the USDD team’s efforts, the market has recovered, but it is still below $1, a fundamental value to recover.

As of Wednesday afternoon, the USDD was still struggling to bounce back to $1.Source: CoinMarketCap

According to an article published on Medium, USDD is currently overcollateralized by about 310% and the minimum collateralization should always be 130%.

With that, the pressure is on the Tron team and even Justin Sun, the famous and marketer founder of the project, who is already looking for ways to avoid the worst.

Justin Sun And Tron Will Set Aside $2 Billion To Try To Save USDD

Justin Sun has already commented on the situation, stating that Tron DAO Reserve is ready to try to turn the situation around with $2 billion to defend USDD support.

β€œThe TRX short investment rate on Binance is 500% negative.

The Tron Reserve will allocate $2 billion to address them. I don’t think they can survive 24 hours, Short’s grip is coming.”

Justin Sun’s idea is to use Tron’s reserve, investing $2 billion in USDD contracts, precisely to counter the shorts betting on the currency’s fall.

The same was true for the Terra UST, but Terraform Labs’ response was much slower, causing the liquidation of futures contract positions to wreak havoc on the entire crypto market.

Could Tron’s Save 2 Billion USDD?

It is difficult to know what will happen in the next few hours, in a short time the market could have a turnaround. However, Tron’s reaction was much faster than Earth’s, so the story may be different.

This, amid a very negative situation for the price of the crypto market as a whole, could also have secondary effects on the entire crypto market, even the price of Bitcoin.

Source: Live Coins

follow:
\