Tron’s Stablecoin USDD Has De-pegged Despite Reserves Being Filled

USDD is following path of UST and is currently trading under $1. Could this be the second collapse that we see for stablecoins this year?
Tron's Stablecoin USDD Has De-pegged Despite Reserves Being Filled

As of writing this article, the price of USDD currently sits at $0.9881. USDD saw its first signs of a de-peg at around 2am UST. 

usdd
Image: CoinMarketCap

This comes right after the Tron DAO reserve being filled and begs the question, is a reserve backing is enough to keep an algorithmic stablecoin pegged?

Tron DAO Reserve, the creators of the algorithmic stablecoin USDD, recently announced the acquisition of $50 million worth of Bitcoin (BTC) and Tron (TRX) from the open market. 

After the shocking collapse of Terra’s UST last month, Tron DAOs goal is to overcollateralize the USDD stablecoin by at least 130%. The purchase of bitcoin is part of this mission. As per USDD’s official website, the coin is now collateralized by a factor of 197%. 

Tron’s USDD was launched on Binance Chain, Ethereum, and TRON on May 5 with the goal to function like a regular stablecoin (i.e. mimicking U.S Dollar) while providing up to 30% Annual Percentage Yield (APY) via staking. 

Since the launch, the DAO has constantly been acquiring substantial quantities of digital assets, mainly Bitcoin and Tether, to back the stablecoin. 

Justin Sun, the founder of Tron Foundation, yesterday polled his 3 million followers if the DAO should start buying Ethereum as a reserve. 

At the time of writing, USDD is among the top 10 stablecoins, with a market cap of around $722 million. 

It’s unclear what the Tron DAO Reserve will do to fix the de-peg and it remains to be seen whether the algorithmic stable coin will have the same fate as Terra’s UST. 

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James Satoshi
James Satoshi
James is a leader in Web3, NFTs, & DeFi. You'll spot him covering all topics through-out Coinmash - some say he's so good he doesn't even seem real.