Hey guys, remember the last time Tron made headlines when it took the third spot in terms of TVL due to its new algorithm stablecoin USDD. Well, it’s back again on the news but this time for all the wrong reasons. On Monday morning, the algorithm-based stablecoin was found to be in distress when investors started to point out that the new algorithm-based stablecoin had depegged from the US dollar and was sitting around just $0.9807 at around 07:52 UTC.

The above findings caused a fresh upheaval of fear and panic throughout the market. Especially in the hearts of the investors who hadn’t quite yet been able to cope with the Terra Luna fiasco. This further negatively affected the price of TRX (Tron’s native coin) which almost instantly plummeted by 16%.

Justin Sun to the rescue

Just as the situation was starting to go out of control Tron’s CEO Justin Sun swept in by assuring everyone that everything was under control and that the depeg was caused by normal market volatility. There is nothing to panic about. Plus, he further added that Tron DAO has injected 700 million USDC to keep the USDD pegged to the dollar.

Further, it was also reported at that time on Tron DAO’s website that USDD was over-collateralized by 277.54%. Hence, giving a sense of assurance that everything was fine.

All these had ensured a small relief bounce for the depegged USDD but still, it had failed to reach its dollar peg.

However, later on, crypto researcher Resdegen pointed out that the claim about USDD being over-collateralized by 277.54% wasn’t true. He clarified that by looking at the stablecoin’s backings, he has come to the conclusion that USDD is actually collateralized by only 92%. Yup, you read that right, it says only 92% and further, without considering Tron’s native coin, TRX the ratio goes down to 73% which is quite alarming.

At the time of writing this article the algorithm stablecoin, USDD is priced at $0.9816 (based on CoinMarketCap). Hence, in short, the coin is still depegged from the US dollar which is obviously a bit concerning.

That will be all for now folks. Make sure to subscribe to our newsletter to receive weekly updates on all kinds of interesting topics.

Disclaimer: This article isn’t a piece of financial advice. DYOR before taking any action.

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