Tron’s stablecoin USDD falls under $0.97

The algorithmic stablecoin USDD, backed by Tron’s founder Justin Sun and managed by Tron’s DAO, fell to $0.9695 on Dec. 12, the lowest since June 22. The algorithmic decentralized stablecoin lost its dollar peg last month as the collapse of FTX shook investor confidence in crypto assets.

USDD, the Tron network’s algorithmic decentralized stablecoin, struggling for a stable US dollar peg continues even as the broader crypto market holds steady.

According to Coingecko, the stablecoin backed by Tron’s founder Justin Sun and managed by Tron’s decentralized autonomous organization (DAO) fell to $0.9695 on Dec. 12 morning, hitting the lowest since June 22. The decline exceeded the DAO’s 3% price fluctuation threshold for price fluctuations to be considered a de-peg.

Last month, USDD departed from a supposed 1:1 exchange rate with the US dollar as the collapse of crypto exchange FTX shook investor confidence in crypto assets. Following the FTX collapse, other leading stablecoins like Tether (USDT) wobbled but quickly regained their peg.

Now, USDD’s prolonged de-pegging is accompanied by a steady increase in the stablecoin’s dominance rate in the USDD/3CRV liquidity pool based on the decentralized exchange Curve.

USDD accounted for 86% of the pool’s total liquidity of $34.5 million at press time, up from 80% on Nov. 10. The massive imbalance suggests users are increasingly swapping USDD for the pool’s other components – USDC, USDT, and DAI.

In a try to calm the market, Tron’s head Justin Sun said on Twitter that he is deploying more capital to defend USDD, adding that the algorithmic stablecoin has a collateral ratio of 200%.

The inability of USDD to regain the dollar peg has the crypto community on Twitter wondering whether the coin modeled after the crash of Terra’s algorithmic stablecoin, UST, is the next in line.

Last week, another algorithmic stablecoin of the Waves ecosystem, USDN, fell to around $0.85, almost 15% down from the peg of $1. Moreover, the price of the Waves token has been down by more than 16% in the following days. Waves token is collateral for USDN.

Meanwhile, The Near Foundation, an organization behind the NEAR blockchain, urged the winding down of the USN stablecoin in October and announced a $40 million fund for a “USN Protection Programme.” USN, a Near-native stablecoin, was created and launched by Decentral Bank (DCB) in April.