Tron DAO Purchases $38 Million in TRX to protect the stablecoin USDD

Tron’s algorithmic stabilitycoin USDD was launched on May 5. The fiat-pegged token is listed on several decentralized finance (defi), protocols. Tron DAO Reserve purchased 504.6 million trons (TRX) two days later to support the algorithmic stablecoin. The Tron DAO Reserve plans to leverage a decentralized forex reserve comparable to Terra’s UST reserves.

Tron DAO Reserve & Justin Sun Reveal a $38 million TRX Purchase

Terra’s UST reserve scheme is becoming a very popular scheme. Tron’s USDD stabilitycoin project follows the same pattern. Bitcoin.com News first reported Tron’s algorithmic stabilitycoin project on April 21. Since then, the fiat-pegged crypto asset is officially launched. The project now has a number partners and USDD is listed on Pancakeswap and Kyberswap.

According to tronscan.org there are approximately 211,245,005.49 USDD as of the writing. Statistic shows that Uniswap version 3 (v3) was the most active exchange for buying and selling USDD on Saturday, May 7, 2022. Although USDD’s market capitalization of $211 million is not as large as Terra’s UST ($18.7B), it has only been around for two day. USDD has seen $2.31 million in the past 24 hours, while terrausd (UST), saw $990.3million in 24 hour trades. USDD’s market value is higher than the $199.5 million market capitalization of gemini dollars (GUSD).

Tron DAO founder Justin Sun and Tron DAO announced on Saturday that 504,600,000.250 TRX had been purchased at an average cost of 0.07727 each unit. Tron DAO Reserve account announced Saturday afternoon that the purchase would be used to “safeguard crypto market and blockchain industry,”

Tron’s founder Justin Sun tweeted “[Tron DAO Reserve] is done its job.”

The quest to perfect the stablecoin continues: Decentralized, Algorithmic and Centralized

Although decentralized and algorithmic stabilitycoins sound great in theory, there are questions and concerns about their ability to maintain a stable peg as long as they exist. Makerdao’s decentralized stablecoin DAI was tested during the March 12th 2020 ‘Black Thursday’ event. There have been some failed centralized stablecoin projects. Makerdao uses an over-collateralization (OC) process to secure DAI’s USD peg, and two years before the March 12th event, Bennett Tomlin’s blog post predicted ethereum’s (ETH) price stress that could affect DAI’s USD peg.

Origin Protocol, OUSD stablecoin issuance, suffered from a flash-loan attack in November 2020. The coin lost its peg temporarily. The Waves-based stablecoin neutrino USDN (USDN), temporarily lost its pegged dollar price during the first week in April. One year ago, April saw the stablecoin fei USD’s (FEI), fiat value fall below a dollar for a brief period. The stablecoin projects have managed to maintain a stable peg ever since. Many of the projects mentioned above have already rebounded quickly after the loss of their peg.

Tron DAO Reserve purchased 504,600,250 TRX for $38.99 million. This TRX purchase follows the Luna Foundation Guard’s recent acquisition of $1.4 BTC (BTC) worth. To protect UST, the non-profit LFG holds now 80,394 BTC. It also has $100 million worth AVAX. Tron DAO also has three crypto institutions that have been whitelisted Tron DAO reserve members. Tron DAO Reserve’s institutional partners are Poloniex and Alameda Research. Tron DAO Reserve is the USDD’s “early custodian”.