TRON raises USDD stablecoin escrow rate to over 200%

In order to avoid becoming a “second UST”, the USDD stablecoin has undergone severe changes to increase the margin ratio to more than 200% to ensure sufficient collateral.

USDD stablecoin collateral increased by more than 200%

As reported by Coincu News, comparing whether Decentralized USD (USDD) is a new algorithmic stablecoin launched on the TRON blockchain in early May 2022 is similar to UST, a collapsed stablecoin that has shaken the market school or not?

UST is the stablecoin that has been haunting the crypto community these days. The collapse of LUNA-UST caused these two cryptocurrencies with a total capitalization of up to 60 billion USD to “evaporate” from the market within just 2 weeks.

USDD stablecoin can be considered a “copy” of the LUNA-UST model when using TRX burning to generate this stablecoin, creating a margin fund in other cryptocurrencies for Decentralized USD supporting APY 30% when sending it in protocols supported by the project.

During the past 1 month of existence, USDD also recorded a strong de-peg (losing the 1 USD mark) on May 12, when the entire crypto market was sold off following the collapse of LUNA-UST. Not only Decentralized USD, but many other stablecoins such as Tether (USDT), Kava’s USDX, Waves’ USDN, or Deus Finance’s DEI are also affected.

In order to reduce collateral risk, one of the reasons leading to the collapse of UST, USDD stablecoin on the afternoon of June 5 said that in the past time, it had increased the amount of collateral for USDD stablecoin to more than 200%. Specifically, at the time of writing, the parameters of USDD are as follows:

– Issued USDD value: 667,521,101 USD

– Value of TRX burned: 8,297,232,883 TRX (approximately 667,521,101 USD)

– BTC holding: 13,040 BTC

USDT holdings: 240 million USDT billion

– TRX holding: 1.8 billion TRX

Thus, it can be seen that although only 667 million USDD is in circulation, the amount of assets used to back it is more than 1.4 billion USD. The actual margin is currently 217%, much higher than the 120% mark that the leading algorithmic stablecoin on Ethereum, DAI, is maintaining. The project claims the margin rate can change over time but is committed to always staying above 130%.

Earlier, in the announcement of its establishment, USDD stablecoin announced that it would build a hedge fund, “TRON DAO Reserve,” with assets up to 10 billion USD, similar to what Luna Foundation Guard intends to do. This fund is receiving the backing of many significant investment funds in the cryptocurrency industry, including Alameda Research, Amber Group, Poloniex, Ankr, Mirana, Multichain, FalconX, and TPS Capital.

TRON Founder Justin Sun, who is also behind USDD, stated:

“We want USDD to have a hybrid model. On one side is the algorithm to keep stablecoins stable; on the other side is the TRON DAO Reserve.

The APY level of 20-30% has been maintained on SUN.io, SunSwap, JustLend, Curve, and Ellipsis, while USDD is traded on Uniswap, PancakeSwap, KyberSwap, Poloniex, Huobi Global, KuCoin, Gate.io, and Bybit.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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