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3. LUNA crash explodes: this Altcoin has lost its peg!

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The cryptocurrency market is starting the week badly. The markets are red. First, the Celsius network announced that withdrawals and trading have been halted due to extreme market conditions. Now, TRON’s USDD stablecoin has separated from the US dollar stablecoin, i.e. dropped, just like the LUNA thing. The markets are red. Here’s what happened …

New MOON? Tron’s stablecoin has lost its stable

The De-peg news was announced on Twitter by Tron’s Justin Sun. It appears that the disruption in the USDD market is due to the negative funding rate for short TRX (open positions) on Binance, which reached 500%. As a result, Tron’s USDD algorithmic stablecoin fell slightly from the USD. USDD lost 1.5% of its value. It is currently trading at $ 0.9886.

Pegging a stablecoin to USD provides a 1: 1 ratio of stablecoin to USD. This increases liquidity in terms of cryptocurrency facilitated by stablecoins versus fiat. According to Justin Sun, the USDD’s departure from the USD doesn’t seem like such an extreme event. In announcing the outage, Sun stated that the situation will be resolved in a short time and that the outage will not last even 24 hours. He also hinted that Tron will use $ 2 billion in TronDao’s reserves to fight Binance’s short-term funding rate and facilitate USDD recovery.

$ 700 million injected to protect USDD

Justin Sun also said that approximately $ 700 million USDC was distributed as part of the $ 2 billion reserve set aside to support USDD. At the time of writing, USDD is trading at $ 0.99. The coin appears to be bouncing off the de-peg which previously dropped to $ 0.98. Tron’s USDD is an algorithmic stablecoin. These stablecoins have come under close scrutiny after the collapse of the Earth MTS. But it appears TRON was prepared for emergencies and acted early enough to deploy reserves to keep it stable.

Meanwhile, the price of TRX is currently down more than 15% in the past few hours. The token is currently trading around $ 0.064. It is thought that the injection of cash from the DAO reserve could effectively counter short position trades by supporting TRX prices with liquidity. Short squeeze is also among the possibilities following Sun’s $ 2 billion cash distribution. cryptocurrency.com As we reported in our previous articles, during a short squeeze, the price of an asset or token goes up. Liquidate traders who believe the price will drop. Traders must then close their positions and buy back the token.

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