Algorithmic stablecoin USDD briefly lost its peg to the US dollar

On Monday, June 13, the algorithmic stablecoin USDD from TRON briefly lost its peg to the US dollar and fell to $0.97.

As of writing, the asset was trading at around $0.99.

The decoupling occurred amid the crash of the cryptocurrency market. At the time of writing, Bitcoin’s price had fallen below $24,800, Ethereum below $1,270.

Earlier, the TRON DAO Reserve purchased BTC and TRON tokens for a total of $50 million to back USDD.

To safeguard the overall blockchain industry and crypto market, TRON DAO Reserve is buying $50 million worth of #BTC and #TRX for reserve.

— TRON DAO Reserve (@trondaoreserve) June 11, 2022

According to the Twitter post, the purchase was driven by a pledge to safeguard the entire blockchain industry and the crypto market as a whole.

According to the organization’s website, as of writing there are more than 723.3 million USDD in circulation, backed by reserves in BTC, USDT and TRX at nearly 185% of value.

In April, Justin Sun announced the launch of USDD, with its release on May 5. The asset, by its algorithmic design, mirrors the TerraUSD (UST) stablecoin model.

On May 10, TRON DAO Reserve began first operations to acquire reserve assets. The organization bought 500 BTC at an average price of $31,000 for more than $15.5 million, and 595.7 million TRX cost $45.6 million.

Later, Sun promised to allocate $2 billion through TRON DAO Reserve to prevent the stablecoin from losing its peg to the US dollar, as happened with UST. According to him, the team learned lessons from the Terra ecosystem crash.

Earlier, Sun said he planned to maintain overcollateralization of the algorithmic stablecoin at no less than 130%.

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