Tron changes USDD to avoid fall like Terra
The Tron project, which recently launched the algorithmic stablecoin USDD, has increased USDD collateral to avoid a massive drop in TerraUSD. Its total collateral supply has increased to about $ 668 million. The collateral ratio of USDD is around 206 percent.
The firm says that for this, the collateral ratio of 130 percent will be maintained. On the Tron DAO Reserve website, reserves of $71 million are shown in TRX of Bitcoin, Tether and Tron. In addition, there are $1.37 billion in assets for USDD in circulation. The firm said that collateral for USDD will be kept higher. This will increase the confidence of the people associated with the market about this stablecoin. Tron founder Justin Sun recently reported that there were already plans to increase the collateral but it has been accelerated after the fall of TerraUSD.
The steep fall in the stablecoins TerraUSD and Terra Luna also had a major impact on the crypto market. This caused the prices of many cryptocurrencies to fall. TerraUSD lost nearly 100 percent of its dollar value, and so did Luna. Luna started declining when TerraUSD broke its engagement with the dollar. The reason for this was the interconnectedness of the prices of these two tokens. This caused a loss of millions of dollars to the investors. Binance's holding in Luna, one of the major crypto exchanges, was reduced from $1.6 billion to just around $2,200.
Stablecoins are cryptocurrencies that attempt to link their market price to a reserve asset such as gold or common currencies. These are more commonly used for digital transactions that involve converting virtual assets into real assets. Ethereum founder Vitalik Buterin believes that algorithmic stablecoins should be scrutinized on the basis of how they perform during bad market conditions. He said that it is not difficult with automated stablecoins but offering higher returns in them will hurt. He said that the sharp fall in UST has led traders to believe that the structure of algorithmic stablecoins is flawed.
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