The coin market has been sailing through treacherous conditions and torrential problems. While most cryptocurrencies have faced the wrath of the turmoil. Stablecoins seem to have performed better and are proving to be an ideal option during market calamities. However, all is not well with this category either.
Marketers, hoping for a quick recovery, wish they didn’t face another catastrophe. However, one fear that has been developing is that of Tron’s USDD, which has lost its value against the USD. Netizens now fear another Terra-like event.
Is Tron’s Stablecoin Hegemony At Stake?
The total market cap of stablecoins at press time was $154.16 billion. Which witnessed a minor change of -0.31%. According to Defillama, the lion’s share is held by Ethereum with 59.26%, followed by Tron with its $36.13 billion stake. Speaking of Tron, the ratio of market capitalization to stablecoin TVL is currently 2,027.
In succession, the dominant stablecoin of the Tron stable is Tether (USDT) at 89.67%, with a market capitalization of $32.4 billion. USDC follows with $2.89 billion and USDD with $480.08 million. Very recently, on June 5, USDD became the first stablecoin to be overcollateralized by more than 200%. With a guaranteed minimum collateral of 130%.
However, since the beginning of the current week, the USDD has been facing an imbalance in its price, which has fallen below $1. This has created havoc among the community, which fears a catastrophe like the one on Terra. Manufacturers have tried to keep the price afloat by injecting liquidity into the system. The Tron DAO reserve had transferred millions of USDC tokens to normalize the condition.
What caused the volatility?
According to the official confirmation of Reserve Tron DAO, USDD currently has a collateralization rate of over 320%. Which was boosted by the recent inflow of 300M USDC as reserve funds. Additionally, the volatility occurred as certain traders’ USDD positions were forcibly liquidated.
Additionally, massive short TRX and USDD positions were piled up for profit amid extremes in the market. The creators claim that everything will be back to normal in a few days. As the TRX funding rate has returned to mid-levels.
In short, the event is scary for both the community and the crypto space in general. Since the industry has just come out of a similar disastrous event. Also, the ongoing claws and obstacles have left a setback for the space. That said, the confirmation and initiatives from the team behind the project have brought a sigh of relief to the community.
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This post Tron is now second only to Ethereum! Will USDD Get $1 Back?
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