Is it working? TRON DAO receives $500 million more to defend USDD

TRON founder Justin Sun announced that TRON DAO added $500 million in USDC to its reserve to support its dollar parity of algorithmic stablecoin USDD. According to him, the USDD ratio (the collateral ratio of a stablecoin is the collateral ratio to the issued stablecoins) is now 310%, although a few days ago, it was 500%. Is the protection plan working? Many users still don’t think so. 

What’s the point?

This means that USDD is currently overcollateralized at 310%. Previously, TRON guaranteed a minimum collateral ratio of 130% at all times.

On 13 June, TRON DAO’s algorithmic stablecoin USDC fell to $0,977 (-39,02%, according to Coinbase) because crypto markets had experienced significant losses. The company decided to deploy $2 billion to protect TRX cryptocurrency. And now, the company is ready to add another $500 million.

But the expected short squeeze (short-term spike in share price that occurs when a significant number of short-sellers are forced to buy shares and exit their positions all at once) hasn’t happened yet, and the company has announced new plans to bolster its algorithmic stablecoin’s dollar parity. 

“For the current market extreme condition, TRON DAO has received another $500 million USDC to defend USDD peg. Now USDD collateralization rate is 310%,” — says the statement. 

TRON DAO’s actions now more and more resemble the LUNA’s model, which, as we know, has ended with the collapse of the cryptocurrency. Many users think this is the wrong way to defend the USDD, as people may dump USDD for USDC, then rebuy USDD and dump it, repeating the cycle.

Some no longer believe the TRON DAO and compare their activities to Do Kwon’s, founder and CEO of Terra Labs, which created LUNA. 

What do you think about that? Will TRON’s strategy be successful? Tell us your thought below.