TRON founder Justin Sun on Monday said he will set up a US$2 billion fund to support the dollar peg of the project’s stablecoin USDD and “fight” against short sellers, after the stablecoin’s price fell to US$0.97.
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Fast facts
- USDD uses an algorithmic mechanism to keep its dollar parity by burning its TRX cryptocurrency, a system similar to the Terra stablecoin that collapsed last month.
- After Sun announced the US$2 billion fund, the stablecoin’s reserve, Tron DAO Reserve, said in a tweet it had received as much as US$700 million in the USDC stablecoin to support the USDD peg, bringing the total defense fund to in excess of US$2.5 billion.
- USDD has yet to regain parity with the U.S. dollar, trading at US$0.98 as of press time, according to CoinGecko.
- Sun’s tweet on Monday said the “funding rate of shorting TRX on Binance is negative -500% APR,” an indication of large numbers of short sellers targeting TRX. Sun said in the same tweet that a squeeze on those short sellers is coming and that he didn’t think they could hold such positions for more than 24 hours.
- The collateralization rate of USDD is 247.01% as of press time — or almost three times the value of USDD available — according to Tron DAO Reserve, with BTC accounting for almost 30% of the reserve.
- The TRX price fell more than 18% in 24 hours and is now US$0.06, according to CoinGecko.
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