Justin Sun, founder of the Tron blockchain, is working to reassure investors after the Tron DAO Reserve withdrew nearly 12,000 Bitcoin, worth approximately $750 million, from the reserves backing its Tron ecosystem’s protocol based stablecoin USDD. Launched in 2022 as a competitor to Terra’s now-defunct UST token, USDD is primarily backed by Tron’s native token, TRX.
The withdrawal of a large amount of Bitcoin has raised concerns among investors, especially given the collapse of TerraUSD, a stablecoin that was also backed by a mix of assets including Bitcoin. Despite these concerns, Sun has remained optimistic about the stability and future of USDD stablecoin.
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According to the Tron DAO Reserve, the 12,000 Bitcoin used as USDD reserves have been redirected to HTX, a crypto exchange. Despite this withdrawal, USDD maintains a strong backing. The current supply of USDD stands at about 745 million, with collateral valued at $1.723 billion. Of this collateral, approximately 98.8%—amounting to 10.93 million TRX, or $1.703 billion—supports the stablecoin.
Sun has likened USDD’s mechanism to that of MakerDAO’s DAI, another decentralized stablecoin, emphasising its transparency and decentralised nature. He explained that USDD’s collateralization rate, which currently exceeds 300%, ensures a robust safety margin. This high collateralization rate, however, indicates that the capital utilisation is not as efficient as it could be, a point Sun acknowledges.
Sun’s reassurances come in the wake of the spectacular collapse of TerraUSD, which was pegged to the US dollar through a mix of algorithmic mechanisms and Bitcoin reserves. TerraUSD’s downfall led to significant market disruption, shaking investor confidence in stablecoins backed by crypto assets.
Despite these historical concerns, Sun continues to promote USDD as a viable and stable alternative, positioning Tron as a significant player in the stablecoin market. “Remember, Tron is also a kingdom of stablecoins,” Sun remarked, signalling his intent to maintain and grow Tron’s influence in the DeFi space.
As the crypto community watches closely, Sun’s ability to deliver on these promises will be critical to maintaining confidence in USDD and its long-term viability as a stablecoin.
Some Crypto enthusiasts claim that USDD stablecoin is gonna collapse soon in the near future.
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Justin Sun Reassures Investors About USDD stablecoin After Withdrawal of $750M in Bitcoin Reserves
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