After TerraUSD, another Stablecoin Ends up Slipping
It has been over a month since the TerraUSD (UST) crash took place but its aftereffects are still lingering. If the UST mishap wasn’t enough for the entire cryptocurrency industry, another stablecoin has ended up facing a similar issue.
USDD Ends up Facing De-pegging
This time, it is USDD that has done nothing but inject more fear and market uncertainty among cryptocurrency investors. The report shows that on Monday, the price of USDD versus the USD went down to $0.97.
This is a huge upset for USDD given the fact that it is supposed to be pegged with the USD. As a result, it is expected that USDD’s price would fluctuate around $1.00 and $0.99.
Once again, due to the de-pegging, the cryptocurrency community has another major protocol to fear and keep an eye on.
The cryptocurrency investors are now fearing that they may get to witness yet another UST-like crash in the form of USDD. A bot named CurveSwaps that is responsible for detecting a change in the trading prices of assets was the one that noticed the change with USDD.
It reported that on Monday, 1 million USDD ended up getting exchanged for 997,339 USDT. Another platform on the blockchain system known as Nansen also noticed a similar kind of activity. Nansen also reported that the USDD amounts in large quantities were being transferred to other stablecoins.
Backing of USDD
With the given situation of USDD, many investors have started asking questions about the backing of the stablecoin. They want to know about the collateralization of USDD and many researchers are coming up with their own explanations.
According to Resdegen, one of the stablecoin researchers, the collateralization of USDD is only 92%. The researcher has estimated that if Tron (TRX) is removed, then the collateralization of USDD would come down to 73%.
Good News for the USDD Investors
Just when it seemed that USDD won’t be able to recover from this downtrend, Ton DAO reserve made a promising announcement. The protocol behind USDD, Tron DAO has announced that a huge amount of 700 million USDC has been received.
The officials at Tron DAO have confirmed that the amount received is for the defense of the pegging for USDD. With the help of the huge support, the collateralization of USDD has now increased all the way up to 300%.
This is a positive sign not only for USDD but also for TRX. This is because the investors of USDD would want not want USDD to lose its peg anymore. Therefore, they will continue supporting TRON to make sure it keeps supporting USDD in boosting its collateralization.