(BTC) Bitcoin News TodayCryptocurrencyNewsStablecoinTerra (LUNA)Trading

USDD’s Collapse Is Imminent – Report

The sudden crash of terra’s UST tokens last month left a bad taste in many investors’ mouths. However, Justin Sun’s Tron launched its stablecoin (the USDD) in the same month.

USDD Struggles To Maintain Its USD Peg

However, there has been one controversy after another following the USDD launch. The USDD continues to struggle to maintain its 1:1 ratio with the USD. It currently trades at $0.9863, according to Coinmarketcap data.

However, Tron founder, Justin Sun, has continuously reaffirmed that the USDD won’t collapse. He claims that the Tron DAO has taken enough measures to ensure that the USDD doesn’t suffer the same fate as the UST.

Sun explained that the USDD stablecoin is over-collateralized. Also, the Tron DAO reserve would take the proper steps to prevent a de-peg. However, Sun’s comments haven’t provided reasonable assurance among investors. Many still fear the USDD will have the same fate as the UST. Their fears are gradually coming to pass as the USDD keeps struggling to maintain its USD peg.

The Tron DAO reserve claims to own a reserve of $2B worth of BTC, USDC, and TRX to deploy where necessary. The DAO has also spent $10m to purchase TRX and USDD. However, analysts estimate that the Tron DAO’s reserve may not be enough to maintain the USDD’s peg.

📰 Also read:  WiseBit.AI Review – Is WiseBit AI Scam or Legit? (Complete WiseBitAI review)

A USDD Investigation Confirms Investors’ Fears

A self-titled crypto detective, Coffeezilla on Twitter, has revealed a report of his investigation into Justin Sun’s USDD. Coffeezilla believes that the USDD will soon go the way of UST. Cofeezilla explained the results of its findings in a new YouTube video. The investigator said the USDD’s market cap of $723m is enough to make it a decentralized algorithmic stablecoin.

Coffeezilla argues that the USDD’s design has similarities with the LUNA/UST design. Users need to burn Tron and mint the USDD stablecoin. He added that the only difference is that there is no mechanism to burn USDD for Tron, and only white-listed institutions can mint the USDD.

The USDD’s design makes it impossible for arbitrageurs to cause massive volatility in its price and a possible crash. However, the design also makes it an unstable algorithmic token. Coffeezilla claims that it is unlikely that the Tron DAO reserve will deploy the USDD’s collateral to re-establish its peg when necessary.

📰 Also read:  Avalanche Foundation Agrees to Buy Back 1.97M AVAX Tokens Sold to Terraform Labs in 2022

“the USDD is like a honeypot for Justin Sun to dump retail traders.” The crypto investigator claims that it is likely that Justin Sun controls the bitcoin wallet linked with the Tron DAO reserve. Hence, he may have turned it into his personal holding.

This wallet has been existing for more than two years. Coffeezilla claims that USDD isn’t decentralized because Sun has minted nearly 94% of the USDD’s supply circulation.


Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.

📰 Also read:  Reddit Sold Most of Its Bitcoin During the Third Quarter, SEC Filing Shows

Shelly Melancon (Switzerland)

Shelly is a cryptocurrency enthusiast from Switzerland, she bought her first crypto in 2015 when it was way less popular then it is today and since 2017 she has been writing about cryptocurrency for online news portals. Shelly is the newest addition to the Tokenhell team, she writes mostly news and reviews related articles , stay tuned to her posts to stay up to date with the crypto world.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Skip to content