Kwon Couldn't Survive Offering 20%, What Makes Justin Think He Can Survive at 30%?

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With fear, uncertainty and doubt running rampant in the stablecoin markets (not to mention the general market as well) as a result of Terra and the UST crash, Justin's Tron network now faces a new systematic crisis going forward [See, e.g. Nagoda, K. Trouble Ahead for Justin? USDD falls to $0.97 - uh oh!. (Accessed June 20, 2022)].

To recap: "the Tron ecosystem had a major blow last week when the USDD stablecoin lost its $1 peg. This led to concerns among traders as USDD was launched last month as a rival to Terra’s UST, an algorithmic stablecoin" [Reddy, A. As USDD Depeg Deepens, What Is Justin Sun’s Plan?. (Accessed June 20, 2022); see, also Singh, T. Tron’s TRX Slumps Nearly 20% As USDD De-peg Deepens. (Accessed June 20, 2022)].

Backing up for the history, USDD was launched by Sun which basically was a copy of Luna/UST. "Just as LUNA provided stability to UST's rate, TRX of the Tron network is responsible for maintaining USDD's peg to the dollar. To attract investors to his project, Sun offered a return of over 30% for staking" [StormGain. New shock among stablecoins. (Accessed June 20, 2022). Initially, USDDs peg held and the price of TRON rose.

USDD Chart (May 1, 2022 through June 12, 2022)

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TRON Chart (March 22, 2022 through June 12, 2022)

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But, as it is now widely known, on June 13, 2022 USDD lost its parity with the United States Dollar and the Tron coin fell approximately 22%.

USDD Chart (May 1, 2022 through June 20, 2022)

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TRON Chart (March 22, 2022 through June 20, 2022)

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But the situation worsens. Yesterday, June 19, 2022, USDD fell to a new low of $0.93 before climbing back up into the $0.95 range (see chart above). "More importantly, USDD lost a market cap of around $19 million in the last one week. From having a market size of $715 million on June 13 to dropping to $696 million currently, the stablecoin depegging clearly had an impact. In fact, the stablecoin failed to gain on its market cap on a daily basis only once before last week’s setback. But for a minor blip on June 2, USDD had a steady increase in market cap ever since its launch on May 5" [Reddy, supra].

On June 17, 2022, regarding collateralization:

TRON DAO has increased its stablecoin reserves to safeguard the blockchain as the USDD continued to trade below its peg... The reserve increased its supply of USDC tokens by 300 million on the blockchain. The current supply now sums up to $2.8 billion... With the increase in the reserve, the USDD’s collateralization rate has reached 324.53%. After the announcement, a marginal increase in the token price has been noticed.

[Singh, T. TRON Increases Reserves As USDD Stays De-pegged. (Accessed June 20, 2022)].

According to the team at Tron: "The stability and security of USDD are ensured by the over-collateralization of multiple mainstream cryptocurrencies" [Reddy, supra]. And

Justin Sun, CEO of the blockchain has hinted that this $2.8 billion reserve will to stretch up to $3 billion. This is not the first instance when the millions have been added to the reserve with an aim to save its stabelcoin. Earlier this month, another $100 million was injected into the reserve. This was the first transfer done by the TRON in order stop its stablecoin from meeting the fate of TERRA LUNA.

[Singh. TRON Increases Reserves As USDD Stays De-pegged, supra].

But despite all these moves, USDD has failed to date to regain parity. Many are jumping Justin's ship and it appears that 'his' community is turning against him.

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So my friends, is the Grim Reaper waiting in the wings to take down USDD? Will Tron fall in its wake? Are we reliving the Terra/UST fiasco? The decision is yours!

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