USDD Threatened With LUNA Incident, Justin Sun Withdraws 2.5 Billion TRX From Binance
JAKARTA – The algorithmic stablecoin issued by TRON DAO, USDD, is reportedly being attacked by short sellers. If they succeed then the TerraUSD event is likely to be experienced by USDD.
In anticipation of a similar incident, TRON founder Justin Sun has reportedly withdrawn around 2.5 billion of TRON's main coin TRX from trading platform Binance. The withdrawal by TRON is claimed to make it difficult for short sellers who want to drop the price of the USDD algorithmic stablecoin.
On the other hand, USDD is almost off the dollar peg. Justin Sun himself promised to immediately restore the condition by injecting funds amounting to 220 million US dollars on Wednesday, June 15 yesterday.
The fund is intended to buy TRX from Binance. According to reports, Sun alone still has another 280 million US dollars to defend the USDD so as not to lose the dollar peg.
The events of the fall of Terra itself have shaken investors' confidence in cryptocurrencies some time ago. This time, Sun's USDD algorithmic stablecoin became a new target for short sellers.
As the market sell-off deepens, TRX as one of the major cryptocurrencies used to prop up USDD has fallen more than 30 percent in the past week. This decline caused USDD to shift off its pegs, as reported by CryptoPotato on Tuesday June 14, 2022.
To maintain the USDD price, DAO Reserve has poured 100 million USD in USDC to Binance to buy TRX last Wednesday. Just a few hours later, TRON injected another 120 million US dollars to maintain the USDD price. Earlier, DAO Reserve revealed that it had received another 500 million US dollars to save its stablecoin.
Recently the DAO Reserve announced the withdrawal of 2.5 billion TRX from the exchange to “safeguard the entire blockchain industry and crypto market.”
The idea behind such a strategy is to reduce the supply of TRX circulating on the exchange, so that short sellers have to pay a higher fee to short the asset. Theoretically if sellers run out of material, this will reduce selling pressure, so asset prices can rise again.