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The USDD stablecoin price continued its sell-off as the newly launched stablecoin lost its peg. The coin slumped to a low of $0.9525 even as the developers attempted to save the token. It is now trading at $0.9707, giving it a market cap of over $703 million.
The birth of USDD
Like Do Kwon, Justin Sun is a charismatic figure, who made headlines when he paid millions to have lunch with Warren Buffett.
After seeing the strong performance of Terra and Terra USD, Sun decided to launch a similar stablecoin. His logic was simple. His Tron platform handles stablecoins worth billions of dollars every day. Most of these coins are Tether, USD Coin, and True USD.
Therefore, he believed that launching his own stablecoin would make its ecosystem more vibrant. This is notable since Tron also has become a leading player in Decentralized Finance (DEFI). Platforms like Sun Swap handle billions of dollars on a daily basis.
USDD was a hit. Since May, the coin saw its market cap soar from $0 to over $700 million, making it the fastest growing cryptocurrency in the world. Notably, this growth happened in a period when most investors were sceptical about algorithmic stablecoins.
USDD loses its peg
Now, the USDD price has lost its peg. Like UST, the coin’s price was modelled in such a way that its price will always remain at $1. If it fell below $1 or moved above $1, then arbitraugers in the network would move back in and stabilize it.
This week, however, it seems like there are challenges to the USDD token as its price has lost its peg. It has fallen below $1 and there are signs that the worse could happen.
The Tron DAO Foundation has made some actions to safeguard the USDD stablecoin. In a statement today, they said that they were withdrawing TRX tokens worth over 1 billion from Binance. In addition to this the organization received USD Coins worth 2 billion in a bid to guard against short sellers.
Still, these actions will likely not save Justin Sun’s stablecoin. As you recall, Luna Foundation Guard made headlines when it acquired Bitcoin worth over $10 billion to safeguard the coin.
Therefore, like I warned before, there is a likelihood that the USDD price will continue falling as holders lose confidence in it.
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