The coin market is passing through treacherous conditions and torrential crises. While most cryptocurrencies have faced the wrath of unrest. Stablecoins seem to have outperformed and are proving to be an ideal option during market disasters. However, all is not well with this category as well.
Marketers, hoping for a quick rebound, wish not to face another disaster. However, a fear that is developing is Tron’s USDD, which has lost its value against the USD. Netizens are now scared of another incident like Terra.
Is Tron’s stablecoin hegemony at stake?
The total market capitalization of stablecoins at the time of publication was $154.16 billion, in which minor changes were observed -0.31%, According to Difilma, Ethereum has the lion’s share 59.26%Then with Tron $36.13 billion stake. Talking about Tron, the stable market capitalization to TVL ratio is currently 2.027,
In succession, the dominant stablecoin from Tron’s stable is Tether (USDT). 89.67%with a market capitalization of $32.4 b, USDC follows $2.89 Band USDD at $480.08 M, Most recently, on June 5, USDD became the first over-collateralized stablecoin. 200%. With guaranteed minimum collateral ratio 130%,
However, since the start of the current week, USDD is facing an imbalance in its price, which has fallen below $1. It has caused havoc among the community, who fear a catastrophe like Terra. Manufacturers have tried to keep prices afloat by adding liquidity to the system. Tron DAO Reserve moved millions of USDC tokens to normalize the situation.
What is the cause of instability?
As per official confirmation by Tron DAO Reserve, USDD currently has a collateralization rate of over 320%. Which was boosted by the recent inflow of 300M USDC as Reserve Fund. Furthermore, volatility occurred because USDD positions of some traders were forcibly liquidated.
Furthermore, massive short positions of TRX and USDD were accumulated to profit between market extremes. The makers claim that everything will be back to normal in a few days. Since TRX’s funding rate has returned to average levels.
In short, the event is terrifying for both the community and the wider crypto space. As the industry just came out of a similar disastrous event. In addition, the ongoing clutches and obstacles have left a blow to the space. That said, the affirmation and initiative by the team behind the project has brought a sigh of relief to the community.