TRON DAO announced it has added US$500 million in USDC to its reserve to bolster its algorithmic stablecoin’s dollar parity, but USDD has been off its peg to the greenback for about two days.
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Fast facts
- USDD uses an algorithmic mechanism to maintain its peg to the dollar by burning TRON’s native token TRX — a model that mirrors the Terra UST (now USTC) stablecoin which is currently worth US$0.008, according to CoinGecko data.
- The TRON DAO Reserve claims that USDD is collateralized at 310%, backed by Bitcoin, USDT, USDC and TRX.
- However, a Proximity Labs researcher “resdegen” on Twitter pointed out that the advertised collateralization on USDD includes burned TRX, which is amplifying the reserve account.
- Before TRON DAO purchased additional collateral, USDD was collateralized at 73% on Monday, according to resdegen’s calculations.
- TRON DAO’s reserves held around US$1.494 billion in cryptocurrencies, pushing USDD’s collateralization rate to 206.55%, as of publishing time, according to Forkast’s calculations.
- The researcher added that US$140 million worth of USDT in TRON DAO’s chest have been deposited into lending and borrowing protocol JustLend, which can be exposed to smart contract exploits and risks.
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