How Tron (TRX) is keeping itself afloat in the face of looming de-pegging fears

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USDD not de-pegged

TronDAO provided a quick Q&A on the status of USDD reserves and planned activities to keep its liquidity ecosystem healthy.

TronDAO executives stated on their official Twitter account that the ongoing reduction in USDD’s worth below $0.97 must not be taken as a de-pegg.

“Is USDD depegged? 

No. USDD is a decentralized stablecoin that depends on an on-chain mechanism & collateralized assets, unlike centralized stablecoin e.x. USDC, which is attached to USD in a very close spread by banking mint and redemption.”

The tweet also clarified that the volatility rate was within the acceptable range of +/- 3 %. The current collateral level is 320 %. 

“Currently, USDD has over 320% collateralization rate with USDC 1,080,000,000 / TRX 10,874,566,176 / BTC 14,040.6 / USDT 140,013,886.” 

The Twitter thread also postulated that TRX funding is normal now, and everything would be normal soon. 

“Since TRX’s funding rate is now down to the normal range and all the positions have been settled, everything will be back to normal in a few days.”

 

Is the UST story repeating?

The USDD de-pegged against the US dollar by roughly 0.3 cents at the start of the week. This sparked widespread concern among investors, who feared a Terra-style collapse. It was enough to wreak havoc on the digital asset industry in these gloomy market conditions. All significant cryptocurrencies are down, as are Celsius & Three Arrows Capital liquidations.

Justin Sun and the Tron DAO team chose market intervention to keep the ship afloat. They chose to take liquidity from reserve funds and invest it in freely available TRX on those exchanges. The team took to Twitter to announce the measure they have taken: 

“To safeguard the overall blockchain industry and crypto market, TRON DAO Reserve will transfer another 100 million #USDC on TRON to cefi exchange to purchase #TRX.”

Around 5 billion TRX coins were withdrawn from controlled exchanges and DeFi loan platforms between the 15th and 16th of June alone. The Tron DAO Reserve transferred another 100 million USDC tokens to exchanges today, and the process was repeated.

Tron DAO Reserve announced in a recent tweet that they had received another 300 million USDC in reserve monies. This increased USDD collateralization to almost 300 percent, safeguarding the network’s security.

 

Still a long way ahead

TRX and USDD still struggle despite Justin Sun and his team’s efforts. The recent crypto meltdown was a huge blow. TRX fell as low as $ 0.046, down by approximately 38%. But TRX has begun to show signs of recovery. 

The local coin gained 27 percent yesterday before a quick sell-off. TRX is trading at $0.061, down around 19 % last week. The network’s volume has also suffered in the last 24 hours, dropping by 50%. TRX’s RSI is currently at 39.8, indicating a period of consolidation in the days ahead. 

Tron vs USD. Source: traingview.com

The market capitalization of Tron has dwindled by 56 % from its peak. The current market cap is $ 5.7 billion. 

Tron market cap
Tron market cap. Source: tradingview.com



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