Ain't that a kick in the pegAnother stablecoin has lost its peg to the US dollar, struggling to retain its stability while the wider crypto market does the same.
- USDD, the stablecoin of the Tron blockchain, has lost its dollar peg – dropping below $0.97. The price drop’s being caused by liquidity for the token drying up on decentralized exchange Curve, as traders seem to prefer more widely known stablecoins like USDT.
- The founder of the Tron blockchain, Justin Sun, has been stepping in to try and fix the problem. Sun said he had purchased 1m USDD in order to try and stabilize the peg, but so far it remains detached. It’s also unclear whether these were personal funds or funds from the project’s governing body.
- Tron’s governing DAO claims that the stablecoin is backed by 200% collateral, meaning the project should hold $2 worth of assets for each USDD token. However it’s not the first time the token has detached – dropping to a price of $0.96 in June this year.
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Not the most successful debutWintermute’s arrival as Tron’s market maker was not serenaded by fanfare, but instead by a pretty brutal DeFi exploit.
- Algorithmic market maker Wintermute suffered a $160m hack on Tuesday. The attacker exploited a weakness in a tool used for naming wallet addresses, and managed to make off with millions of dollars worth of stablecoins (and a few other tokens).
- The protocol was made the official market maker of Tron only last week, so if there was one thing they were hoping wouldn't happen – it was prolly this. Making matters worse is the fact that the hacker exploited a well-known vulnerability in private keys that the company has been aware of since January.
- Wintermute wants users to look on the bright side – at least they’re solvent with “twice that amount left” and will honor any requests from lenders to recall their loans. Apparently it won't affect their centralized operations, only DeFi, and we can only hope others address this vulnerability before another hacker gets wind of the tactic.
Sun stands up for his stablecoin babyTron’s founder Justin Sun says USDD is ‘absolutely nothing like UST!’ To everyone else tho – it’s looking strangely familiar.
- Tron founder Justin Sun is making the case for his USDD stablecoin by claiming it’s very different to the failed UST stablecoin of Terra. Thing is, they’re both algorithmic and they both involve some sort of crypto-collateralization. Although apparently, it uses a different algorithm which Sun says “uses the best aspects of all stablecoins”. That’s what they all say…
- USDD already depegged in June this year and fell to a price of just $0.93. Considering it only launched in May, it didn’t exactly help his case. Sun said during an interview that “they have studied all the algorithms in the decentralized stablecoin market and made better choices”, but he'll still have a hard time winning people over.
- Meanwhile, stablecoin issuers like Tether and Circle have crazy debt to report with JP Morgan showing that at $80bn, they have more US-government debt than Warren Buffet’s investment giant Berkshire Hathaway. That being said, USDT and USDC are backed by fiat currency which should make them a lot more secure than USDD.
DrawKit Illustrations / Unsplash
That didn’t last longAfter only a month on the market, Tron’s algorithmic stablecoin loses its dollar peg, leaving peeps wondering whether they’re about to suffer the same fate as Terra.
- USDD strayed to $0.91 on Monday, eventually closing around the $0.98 mark. Like Terra’s UST, the stablecoin runs on an algorithm linked to Tron’s native token, TRX. The two are not identical, though – USDD has reserves in other stablecoins, unlike Terra, which was backed with just Bitcoin and a small portion of AVAX.
- Nansen AI, which identified the addresses that dumped UST, reported this mystery wallet is at it again. In a tweet, data showed that the same wallet that allegedly instigated the UST depeg has started transferring large amounts of USDD and other stablecoins in what could be a coordinated dump.
- The good news? Well, USDD certainly has less exposure and pressure upon it than UST did, so it could be easier to correct. Tron founder Justin Sun has already promised to deploy $2bn to fight the problem, although in fairness, that sounds similar to what the folks at Terra were saying pre-crash. We can but wait and see.
Oapital (labelled on
), one of the funds involved in capitalising off of the $UST de-peg is now actively making large transfers of $USDD and other stables.
Doesn't look great.
Tron visits the Terra orphanageTron comes knocking on developers’ doors, launching a fund to rescue estranged projects on Terra.
- Tron DAO will put forward $10m to support devs migrating from Terra to its ecosystem. Devs will be incentivized through staking rewards granted by Tron, as well as a nice warm home to build their, currently pretty dormant, projects on.
- Polygon has already been hanging around Terra HQ a la Romeo outside Juliet’s balcony. The Ethereum based layer 2 protocol has been trying to woo multiple Terra projects to its NFT gaming hub Polygon Studios.
- In a month that has seen Bitcoin lose 20%, TRX is up 30%. Perhaps thanks to the launch of its stablecoin USDD, Tron has navigated the sea of red to emerge as dry and green as a cactus in the crypto desert. Whether it could stomach a crypto winter, however, is yet to be seen.
Quantitatives / Unsplash
Tight code, double D’s, making Sun go wit-wooAfter a few days of respectful mourning, Tron founder Justin Sun is telling all why his USDD stablecoin won’t suffer the same fate as UST.
- Sun reckons Terra’s downfall isn’t a fatal blow for algorithmic stablecoins. He attributes a lot of Terra’s downfall to its dependency on a highly leveraged model – when the market came under stress, the money in its reserves was not immediately accessible to recover. Tron, he says, aims for slower, healthier growth to help mature USDD.
- USDD will be backed with an assortment of crypto. While Tron’s reserves will be supported mostly with its native token TRX and Bitcoin, stablecoins such as USDT, USDC, DAI, and TUSD will be used to fill up the rest of the pie. And that pie is set to be worth a mega $10bn.
- Stablecoins… backed with stablecoins? Sounds kinda strange ngl, but Sun claims this is bc stablecoins can be deployed immediately and provide much quicker liquidity if any meltdown happens. However, he also claims that Tron’s reserves will be decentralized… which is a bit of a stretch given how centralized USDC and USDT are.
CoinDesk / Flickr
USDD goes liveTron is set to follow in the same vein as Terra as it launches its stablecoin project USDD.
- USDD will be an algorithmic stablecoin. Put simply, this means a smart contract embedded in Tron’s network will artificially control supply and demand to maintain its pegged price.
- Get ready, Bitcoin – you’ve got another wholesale buyer. Like Terra, Tron will back its stablecoin venture with Bitcoin, targeting to have $10bn worth of the crypto in its reserves to ensure maximum stability for USDD.
- Tron’s decentralized autonomous organization (DAO) will keep care of USDD. It will have the important responsibility of stepping in if a volatile shift causes the algorithmic mechanism to fail, at which point those assets we mentioned in its reserves will have to be deployed.
Ash Edmonds / Unsplash
Tron plans to tread on some stablecoin toesTron joins the stablecoin game with Decentralized USD (USDD), and founder Justin Sun is already bigging up his new creation quite a bit.
- The new USDD will spearhead the “Stablecoin 3.0 era” according to Sun, and in this era, USDD will not rely on any centralized help for storage or management. This begs the question, what will Tron use to back it? Given fiat is pretty centralized, the crypto network has already ruled that method out, but Bitcoin could be a shout – that’s what Terra is doing.
- It seems Sun wants more than just a slice of the stablecoin market pie. He made two pretty bold claims this week: first stating USDD will maintain its dollar peg regardless of market volatility, and secondly that the stablecoin will become “the most decentralized in human history.” You’d hope so, given it’s literally in the title.
- TRX liked the sound of the news, up over 12% on Thursday. Terra’s recent success with its stablecoin UST (now #3 in the stablecoin rankings) has seen explosive gains for its native token LUNA. Based on that logic, investors will be hoping TRX will get similar attention if Tron’s stablecoin venture pops off.
(2/5)🧐In the history of #blockchain, #stablecoin has gone through the 1.0 and 2.0 eras represented by #Omni-based and #TRON-based #USDTs. Now it has ushered into the Stablecoin 3.0 era led by #TRON’s #USDD.
Hit by a Tron of controversyThe harsh glare of the spotlight is aimed directly at Tron founder Justin Sun after an exposé on his allegedly illegal business practices.
🔍 Key points:
- The Verge has accused Sun of insider trading and violating international law by gaming the crypto market system in an explosive article that details his alleged mismanagement of both Tron and Poloniex, which he founded in 2019.
- The article claims he evaded regulators in the U.S. and China, saying that the network was prone to ignoring KYC procedures and planned to pump the TRX token with whales. Needless to say, he ain't happy, calling the whole thing “fabricated”; and neither is the token, which sank 10% on Thursday.
- Sun is one of the most controversial figures in crypto, and has recently been making headlines for towing the line with both Russia and Ukraine. He’s been seemingly supporting both sides by donating to Ukraine while expressing his hopes for more collaboration with Russia. Maybe he’s trying to stay neutral, but the community is confused.
Braňo / Unsplash
Luring in developers and investors in one goTron’s founder launches a new $1.1bn fund to catalyze growth – and apparently it's working, because its token reached a six-month high on Monday.
- Tron is one of the biggest blockchain ecosystems, already hosts a bunch of activities like dApps and NFTs and up 310% this year.
- Its founder, Justin Sun, unveiled a $1,111,111 ecosystem fund on November 8 that aims to attract new developers to its network with new tools and features.
- It was up 23% since then to its highest price since May on Tuesday until a sudden crypto crash wiped 12% off the prices on Tuesday.
Illustration by TradingView