Tron’s USDD Stablecoin Removes Bitcoin Reserves, Justin Sun Explains Why

The Tron DAO Reserve undertook a major decision about removing Bitcoins as part of the reserves for its USDD stablecoin while flowing the proceeds back into HTX coin. This move has got crypto industry observers on the edge of their seats with Tron’s stablecoin Dollar peg seeing some volatility down by 0.17% to $0.9989 as of press time.

Tron’s USDD Stablecoin Bitcoin Reserves Dropping

The Arkham Intelligence data clearly shows that over the last three days, the Tron DAO Reserve address has moved 4,000 Bitcoin to HTX. Over the last year, they have systematically reduced the Bitcoin reserves by 42% but still hold 8K Bitcoins as part of their reserves.

Currently, the USDD supply stands at 745 million with a massive collateral value of $1.723 billion. However, it turns out that nearly 99% of this collateral is backed by Tron’s native crypto TRX, with the total backing at 10.93 million TRX.

Founder Justin Sun provided his explanation for the decentralized USDD stablecoin while comparing its functioning to MakerDAO’s DAI. He said that USDD operates via a collateralization model allowing collateral holders to freely withdraw assets whenever the collateral exceeds a specified threshold usually between 120%-150%. But whenever the collateral falls below 110%, it will add another collateral to avoid liquidation. “This is part of the basics of DeFi 101,” he said.

The USDD has a collateralization rate exceeding 300% as of now indicating low capital efficiency. Sun noted that the TRON DAO Reserve plans to upgrade USDD stablecoin to make it a more competitive decentralized stablecoin in the market. He also emphasized that Tron is a stronghold for stablecoins.

Tron’s TRX Gaining Strength

The massive memecoin frenzy on the Tron blockchain has led to a strong surge in network activity, leading to 19% gains for the TRX price on the weekly chart. TRX has been having a close fight with Cardano’s ADA for the tenth spot and is currently trading around $0.1548 with a market cap of $13.45 billion. Amid the current rally, the TRX price is eyeing a move to its all-time high level of $0.20.

The memecoin frenzy on Tron’s SunPump platform has also led to a huge surge in the Tron network’s daily revenue with Justin Sun putting an ambitious target of $4 billion in the coming year. While being bullish on his memecoin strategy, Sun suggests burning $1 billion of this revenue while allocating $2 billion to stakers and covering transaction fees.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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