Algorithmic Stablecoin USDD Depegs, Now Trading at $0.98

Algorithmic Stablecoin USDD Depegs, Now Trading at $0.98
  • A whale executed a 4.49 million USDD to 4.46 million USDT exchange.
  • The USD dropped to $0.975 on November 9 when another “whale” traded 6.65M USDD.

Justin Sun, the founder of Tron, plans to provide a “holistic solution” to alleviate the liquidity crisis facing FTX. Meanwhile, on-chain data indicated that the algorithmic stablecoin USDD has unexpectedly begun depegging and was last trading at $0.98. A previous response from Justin Sun indicated that it is likely that Alameda is selling USD to cover liquidity at FTX. Right now, he claims, there is “basically panic sell on the Ethereum blockchain.”

On-chain data suggests that a selloff of USDD stablecoins by “whales” prompted the stablecoin to depeg. A whale executed a 4.49 million USDD to 4.46 million USDT exchange on November 8 at a rate of $0.9935. The outcome was a drop in USDD to $0.983.

Supply and Collateral

The USD dropped to $0.975 on November 9 when another “whale” traded 6.65 million USDD for $6.51 million USDC at a rate of $0.9799. Also, there is a huge disparity between the supply and demand for USDD in Curve’s liquidity pool, where USDD may be traded for other stablecoins like USDT, USDC, and DAI.

Supply and collateral for the USDD algorithmic stablecoin are managed by the Tron DAO Reserve. Data from the Tron DAO Reserve shows that the total USDD collateral guaranteed by TRX, Bitcoin, stablecoins USDT, and USDC has decreased to $1.7 billion. Additionally, the collateral ratio is down to 214.42%.

Further, more than 99 percent of TRX is locked in a staking governance contract. As a result, just 500 million USDC and 14,040.6 BTC, valued at $230 million, are available as collateral. The true collateral ratio is only 114%.

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