Tron changes USDD stable coin to avoid disaster like Terra

The total USDD supply is around $668 million. According to the TDR website, the USDD had a collateralization ratio of 218 percent as of Monday morning Asia time, while the company stated on Sunday that a guaranteed minimum collateral ratio of 130 percent will be maintained.

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Tron, which debuted the USDD algorithmic stablecoin last month, is attempting to avoid the problems encountered by TerraUSD by increasing transparency and adding collateral.

According to the Tron DAO Reserve website and CoinGecko, the total USDD supply is around $668 million. According to the TDR website, the USDD had a collateralization ratio of 218 percent as of Monday morning Asia time, while the company stated on Sunday that a guaranteed minimum collateral ratio of 130 percent will be maintained.

TDR’s website shows $787 million in reserves in Bitcoin, Tether, and Tron’s TRX, contributing to a total of about $1.4 billion in assets backing USDD in circulation.

TerraUSD ecosystem collapsed

The moves come just a few weeks after the Luna and TerraUSD ecosystems collapsed. Wiping out a combined market value of more than $60 billion. “This has been in the plan, but Terra/Luna definitely accelerated and prioritized this for our team”. Tron founder Justin Sun said in a recent interview. “We want to have USDD to be overcollateralized. Which I think will make market participants more comfortable about using us in the future.”

Algorithmic stablecoins, which are designed to maintain a constant price, typically $1, have a tumultuous history. After price declines in the stabilising token, efforts such as Neutrino and Basis have lost their dollar pegs, some spectacularly.

The collapse of Luna and TerraUSD last month wreaked even more havoc on the cryptocurrency complex. Which has been struggling as the Federal Reserve raises interest rates and inflation remains high. Bitcoin and Ether, the two most important tokens, are down more than 50% from their November highs. And many other digital assets have fallen even further.

Sun stated in an interview last month that the Terra/Luna collapse provided an opportunity for other projects to adjust. And that USDD would seek $10 billion in TDR to defend its peg.

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