Seven days ago, Bitcoin.com News reported on the Tron DAO Reserve purchasing $38 million in tron to safeguard the network’s stablecoin USDD. Since the terrausd (UST) de-pegging event, the Tron DAO Reserve has continued to purchase large quantities of digital assets to bolster the project’s reserves. In addition to the Tron purchases, the organization has been adding stablecoins and bitcoin into the mix.
While Terra’s Stablecoin Imploded, Tron’s Algorithmic Dollar-Pegged Crypto Project Purchases Millions Worth of Tron, Bitcoin, and Tether to Defend USDD
During the past week, all eyes focused on the Terra blockchain and its native crypto-assets LUNA and UST. In roughly three days, both coins divebombed significantly in USD value. More than $46 billion in value disappeared from the crypto economy. Amid all the carnage, the Tron DAO Reserve has continued to purchase crypto-assets for its digital currency-based forex reserves. On May 7, Bitcoin.com News reported on Tron’s founder Justin Sun and the Tron DAO Reserve purchasing $38 million in tron (TRX).
Since then, the project has continued to buy crypto amid the market carnage because of the UST fallout. Tron’s stablecoin USDD is also an algorithmic dollar-pegged crypto asset that has similarities to Terra’s UST. After purchasing 504.6 million Tron (TRX), the Tron DAO Reserve tweeted that the team aims to “guard the overall blockchain industry and market, prevent panic trading caused by financial crises, and mitigate severe and long-term economic downturns.” The Tron DAO Reserve (TDR) further added:
We also manage the permissions of USDD as its early custodian and ensure its price stability with reserves.
After the 504.6 million Tron purchase, the TDR continued to add funds into the reserve this past week. “To safeguard the overall blockchain industry and crypto market, Tron DAO Reserve has bought 500 BTC with an average price of $31,031.35 for $15,515,675,” TDR detailed on May 10. The same day, the TDR said it purchased 595,729,832 Tron for $45.6 million. While the crypto market was chaotic that day, the TDR team noted that “USDD holds steady in today’s market volatility.”
Buying MOAR! https://t.co/DVG3sIWlic
— H.E. Justin Sun 🅣🌞🇬🇩 (@justinsuntron) May 12, 2022
The following day on May 11, the TDR team tweeted: “To safeguard the overall blockchain industry and crypto market, [TDR] have bought 1,000 BTC with an average price of $30,096 for $30,096,000.” The TDR organization bought 1,467,612,695 TRX for $97 million for the reserves after that purchase. The TDR then started to buy stablecoins after Tron’s $97 million worth was purchased. The TDR team explained on May 12:
To safeguard the overall blockchain industry and crypto market, [TDR] has bought 100,000,000 USDT with an average price of $0.982 with $98,200,000.
The TDR team did not stop there and has continued to purchase more coins to safeguard the Tron network’s stablecoin USDD. The TDR said on May 12. It purchased 200 million USDT for $0.985 per unit, which added around $197 million in U.S. dollars. The Tron-based stablecoin reserve team then bought 1,249.57 BTC at an average price of around $29,394.
Tron’s Justin Sun ‘Still Believes in Algorithmic Stablecoins’
On Saturday, May 14, 2022, the USDD stablecoin has a market valuation of around $272.36 million. There are 271,438,207 USDD in circulation at the time of writing. USDD has seen $85.5 million in global trade volume during the past day, and the crypto asset is the 156th largest market cap.
Like the Terra blockchain’s mechanism of burning LUNA to produce UST, to mint, a single USDD costs $1 worth of Tron to issue the crypto asset. This means it can grow as large as the market allows it. It allows anyone to mint the stablecoin in a permissionless manner. However, with the market turmoil due to the UST de-pegging event, it is safe to say the crypto community is suspicious of algorithmic stablecoin assets.
Despite the issues this past week, Tron founder Justin Sun talked to Coindesk’s Tracy Wang. He said he is still optimistic about the algorithmic stablecoin model. “I still believe in algorithmic stablecoins,” Sun explained to Wang during a Zoom interview.
What do you think about the USDD stablecoin project created by the Tron team? What do you think about the TDR’s purchases this week? Let us know what you think about this subject in the comments section below.