The price of the USDD stablecoin continues its selloff as the newly launched stablecoin has lost its peg. The coin fell to a low of $0.9525 even as developers attempted to save the coin. It is now trading at $0.9707, which gives it a market cap of over $703 million.
Like Du Kwon, Justin Sun is a charismatic man who made headlines by paying 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 reasoning was simple. Their Tron platform handles billions of dollars worth of stablecoins every day. Most of these coins are Tether, USD Coin and True USD.
Therefore, he believed that launching its own stablecoin would make its ecosystem more livable. This is notable as Tron has also 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’s market cap has grown from $0 to over $700 million, making it the fastest growing cryptocurrency in the world. Notably, this increase occurred during a period when most investors were skeptical about algorithmic stablecoins.
USDD loses its peg
Now, the price of USDD has lost its peg. Like the UST, the coin’s price was structured in such a way that it would always be priced at $1. If it drops below $1 or moves above $1, the intermediaries in the network will move back and freeze it.
However, this week, it looks like there are challenges for the USDD token, as its price has lost its peg, It has dropped below $1 and there are signs that it could be worse.
The Tron DAO Foundation has taken some steps to protect the USDD stablecoin. In a statement today, they said that they are withdrawing over 1 billion TRX tokens from Binance. In addition the organization received USD 2 billion in coins to defend against short sellers.
Nevertheless, these actions will not save the Sun Yuken stablecoin. As you remember, the Luna Foundation Guard made headlines when it acquired over $10 billion worth of bitcoins to protect the coin.
So, as i warned earlierThere is a possibility that the price of USDD will continue to fall as holders lose faith in it.