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TRON in crisis: Network’s stablecoin lost its dollar backing

TRON in crisis: Network's stablecoin lost its dollar backing

A short time after the disaster of TerraUSD, the stablecoin that lost its backing in the dollar, a very similar situation begins to form on the TRON blockchain, with the team behind the project in crisis mode to try to contain a great damage that could reach the cryptocurrency ecosystem. The Tron blockchain stablecoin, USD, which is an algorithmic stable coin, is showing a very worrying situation since last Monday. In the last three days the currency has been failing to maintain its dollar backing, that is, it is trading below the value it should be.
USDD price well below its supposed 1:1 value with the dollar. Source With this scenario, the concern on the part of investors is obvious, since, as was the case with the UST, it could represent a collapse not only for the stablecoin market, but also for Tron (TRX), which could lose market confidence after this failure. The loss of ballast appears to have coincided with a change in the stability algorithm model. Recently, possibly as a result of the effort of the USDD team, the market has recovered its value, but it is still below US$ 1 dollar, a fundamental value for it to recover.
As of Wednesday afternoon, the USDD was still struggling to get back to $1. Source: CoinMarketCap According to a text published on Medium, USDD is currently over-collateralized by about 310%, and the minimum collateralization should always be 130%. With that, the pressure is on the Tron team and even on 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 commit $2 billion to try to save USDD

Justin Sun has already commented on the situation and stated that Tron DAO Reserve is ready to try to reverse the situation with $2 billion to defend the USDD backing.

“The TRX short investment rate on Binance is 500% negative. The Tron Reserve will allocate USD 2 billion to address them. I don’t think they can survive for 24 hours, Short’s grip coming.”

Justin Sun’s idea is to use Tron’s reserve, investing $2 billion in USDD contracts precisely to go against the shorts who are betting on the currency’s fall. The same was true for the Terra UST, however, Terraform Labs’ response was much slower, allowing the liquidation of futures contract positions to wreak havoc on the entire crypto market.

Can Tron’s 2 Billion Save 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 response was much faster than Earth’s, so it could be that the story is different. This, in the midst of a very negative situation for the price of the crypto market as a whole, can also have secondary effects on the entire crypto market, even on the price of Bitcoin.

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