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.
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.
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.
βThe 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.”
Shorting funding ratio #TRX On @binance is negative 500% APR. @rondaoreserve will deploy USD 2 billion to fight them. I don’t think they can last 24 hours. Short squeeze are coming. pic.twitter.com/VRExM6UK70
β HE Justin Sun π £ππ¬π© (@justinsuntron) June 13, 2022
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
John Cameron is a journalist at The Nation View specializing in world news and current events, particularly in international politics and diplomacy. With expertise in international relations, he covers a range of topics including conflicts, politics and economic trends.