/USDD Collateralized Ratio May Have Been Miscalculated, Well below 200%+

USDD Collateralized Ratio May Have Been Miscalculated, Well below 200%+


Another algorithmic stablecoin lost its peg, this time it is USDD. Launched by TRON only a month ago, USDD lost its peg as heavy selling across the top cryptocurrencies has persisted.

Justin Sunday, Founder of the TRON Foundation announced that 700 million USDC will be injected to defend the peg. Additionally, $2 billion were to be deployed and ‘funding rate of shorting #TRX on Binance is negative 500% APR.’

usdd depeg

source: twitter

TRON DAO Reserve also announced the measures it has taken to fight off the de-pegging of USDD:

‘To safeguard the overall  blockchain 
Blockchain

Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a
cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.

Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.
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industry and crypto market, TRON DAO Reserve have increased 650,000,000 USDC supply on TRON. Currently USDC supply on TRON has reached $2.5 billion.’

TRON Safety Net?

At the beginning of June 2022, Justin Sun discussed the safety net for USDD, “Spearheading the Stablecoin 3.0 era, the upgraded, over-collateralized USDD will add more diversified features to underpin its stability.

“The $10 billion reserves pledged by the TDR will enable USDD to become the most reliable decentralized  stablecoin 
Stablecoin

Unlike other cryptocurrencies like
Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.

Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.
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with the highest collateral ratio in blockchain history. Currently, the 200%+ collateral ratio offers USDD a very strong safety net.”

A user by the name of Resdegen (an executive from Proximity Labs) tweeted that the 200%+ collateral ratio may be inaccurate. Resdegen explained earlier this month that the collateral ratio of a stablecoin is the ratio of the collateral to the issued stablecoins.

The following formula provides the collateralized ratio:

[USDD collateral (reserves)/ total supply of USDD]*100 = [835.9 million/ 667 million]*100 = 125.32%

Resdegen wondered how did Justin Sun calculated the +200% collateral ratio to USDD. He then discovered that the burned TRX is used in the calculations.

Reserves + 8.29B $TRX burnt (= $USDD supply) = $787M + $667M = $1.454B.

Then collateral ratio = 1.454 / 0.667 = 218%

USDD may be minted by burning TRX. The TRX tokens that are burned to mint USDD are factored in the collateral backing of USDD:

[USDD reserves + burnt TRX / total supply of USDD]*100= [835.9 million + 667 million / 667 million]*100 = 225%

Prior to USDD de-pegging, TRX was over 18% of the reserves. Resdegen calculated that the real collateral without TRX (reserves and burnt TRX) is around 81%.

Due to the recent bear market (dubbed crypto winter), the top cryptocurrencies declined including TRX. Resdegen added that maintaining USDD de-peg depends on the appreciation of TRX (similar concept was seen in Terra Luna prior to the hard fork). As it was not the case, USDD lost its peg to the US Dollar (USD).

trx

source: coinglass

Whether it was indeed a miscalculation or not, USDD is trading at $0.98 at the time of this writing. Despite recent efforts the token is still unable to regain its peg to the US Dollar at the time of this writing.

Another algorithmic stablecoin lost its peg, this time it is USDD. Launched by TRON only a month ago, USDD lost its peg as heavy selling across the top cryptocurrencies has persisted.

Justin Sunday, Founder of the TRON Foundation announced that 700 million USDC will be injected to defend the peg. Additionally, $2 billion were to be deployed and ‘funding rate of shorting #TRX on Binance is negative 500% APR.’

usdd depeg

source: twitter

TRON DAO Reserve also announced the measures it has taken to fight off the de-pegging of USDD:

‘To safeguard the overall  blockchain 
Blockchain

Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a
cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.

Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.
Read this Term
industry and crypto market, TRON DAO Reserve have increased 650,000,000 USDC supply on TRON. Currently USDC supply on TRON has reached $2.5 billion.’

TRON Safety Net?

At the beginning of June 2022, Justin Sun discussed the safety net for USDD, “Spearheading the Stablecoin 3.0 era, the upgraded, over-collateralized USDD will add more diversified features to underpin its stability.

“The $10 billion reserves pledged by the TDR will enable USDD to become the most reliable decentralized  stablecoin 
Stablecoin

Unlike other cryptocurrencies like
Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.

Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.
Read this Term
with the highest collateral ratio in blockchain history. Currently, the 200%+ collateral ratio offers USDD a very strong safety net.”

A user by the name of Resdegen (an executive from Proximity Labs) tweeted that the 200%+ collateral ratio may be inaccurate. Resdegen explained earlier this month that the collateral ratio of a stablecoin is the ratio of the collateral to the issued stablecoins.

The following formula provides the collateralized ratio:

[USDD collateral (reserves)/ total supply of USDD]*100 = [835.9 million/ 667 million]*100 = 125.32%

Resdegen wondered how did Justin Sun calculated the +200% collateral ratio to USDD. He then discovered that the burned TRX is used in the calculations.

Reserves + 8.29B $TRX burnt (= $USDD supply) = $787M + $667M = $1.454B.

Then collateral ratio = 1.454 / 0.667 = 218%

USDD may be minted by burning TRX. The TRX tokens that are burned to mint USDD are factored in the collateral backing of USDD:

[USDD reserves + burnt TRX / total supply of USDD]*100= [835.9 million + 667 million / 667 million]*100 = 225%

Prior to USDD de-pegging, TRX was over 18% of the reserves. Resdegen calculated that the real collateral without TRX (reserves and burnt TRX) is around 81%.

Due to the recent bear market (dubbed crypto winter), the top cryptocurrencies declined including TRX. Resdegen added that maintaining USDD de-peg depends on the appreciation of TRX (similar concept was seen in Terra Luna prior to the hard fork). As it was not the case, USDD lost its peg to the US Dollar (USD).

trx

source: coinglass

Whether it was indeed a miscalculation or not, USDD is trading at $0.98 at the time of this writing. Despite recent efforts the token is still unable to regain its peg to the US Dollar at the time of this writing.

Original Source