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Despite Overcollateralized Reserve, Tron’s USDD Stablecoin Slips to $0.974 per Token

Following the crypto market carnage on Monday, the following day crypto prices have shown some improvement. However, Tron’s stablecoin USDD has once again dropped to $0.974 per unit, indicating a small amount of instability continues to plague the fiat-pegged token. The dip to $0.97 follows Monday’s deviation from the parity and comes after the Tron DAO Reserve deployed large quantities of USDC to shore up the reserve’s defense.

During the evening trading sessions on Monday, bitcoin’s (BTC) price fell below $21K and held just above 2017’s all-time price high. On Tuesday, crypto prices have seen a slight improvement but USDD is still under the $1 parity.

At the time of writing, USDD is swapping for values between $0.978 and $0.98 per unit, but hit a low on Tuesday at $0.974253 per token. The most recent low is a touch lower than the drop recorded the day prior, and it happened at 3:45 a.m. (ET) on Tuesday.

People are concerned about USDD because it is similar to Terra’s former stablecoin UST which saw a slight de-pegging the day before it dive-bombed toward $0.704 per unit on May 9, 2022. On Tuesday, Tron’s founder Justin Sun tweeted about the USDD movement against tether (USDT).

140 million USDT is also held by the reserve and 500 million USDC is also recorded in the Tron DAO reserve ledger. The Tron DAO reserve stats show that other stablecoins are collateralized by 100% reserves and DAI is overcollateralized by 120%. The website highlights that USDD is a lot more collateralized than the other stablecoins showcased.

The defi protocol called Justlend, which offers a 20% APY similar to the one once offered by the Terra defi application Anchor, is Tron’s largest defi application today, with $2.36 billion total value locked (TVL). Tron’s entire TVL is $4.55 billion which means Justlend’s dominance today is 51.86%. Justlend still saw a TVL increase of over 33% during the last 30 days despite the recent market carnage. With USDD hitting a low of $0.974, a $100 investment would only equate to $97.40.

What do you think about Tron’s stablecoin USDD dropping to $0.97 per coin? Let us know what you think about this subject in the comments section below.


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