Justin Sun Removes bitcoin Collateral from USDD Stablecoin, Increasing TRX Backing
The recent decision to remove 12,000 bitcoin, totaling around $726 million, from the USDD stablecoin’s collateral has sparked discussions within the cryptocurrency community. The move, which shifts the stablecoin’s backing primarily to TRX, the native token of the Tron blockchain, has raised concerns among industry participants.
Despite the significant change in collateral composition, the TRON DAO did not issue any official announcement regarding the alteration. The adjustment was first noticed on a popular social media platform, leading to speculation and analysis from market observers.
Sun Down Plays the Collateral Removal
Responding to the reports and criticisms surrounding the collateral removal, Tron founder Justin Sun took to social media to address the situation. Sun emphasized that the process of withdrawing collateral assets, without requiring approval, is a standard feature of USDD’s mechanism, drawing parallels to MakerDAO’s operations.
Sun further acknowledged that the current collateralization rate of USDD, exceeding 300%, is not the most capital-efficient model. He hinted at upcoming upgrades to the stablecoin, aimed at improving its competitiveness in the decentralized finance (DeFi) market.
However, Sun’s comments did not provide detailed insights into the extent of the TRON DAO’s involvement in the decision to remove bitcoin from USDD’s backing. The community awaits further clarification on the governance dynamics surrounding such significant changes.
TRX Emerges as Primary Backing for USDD
Originally conceived as an algorithmic stablecoin similar to Terra’s UST, USDD transitioned to a hybrid model backed by a diverse mix of assets, including bitcoin, TRX, USDT, and USDC. Despite recent modifications to its collateral composition, USDD maintains its peg to the U.S. dollar, with a total market cap of approximately $744 million, securing its position among the top 100 cryptocurrencies.
TRX, now serving as the primary backing for USDD, has experienced increased volatility but remains a prominent top 10 cryptocurrency, excluding stablecoins. Trading at $0.15, TRX has demonstrated significant growth over the past year, partly driven by its adoption in the evolving memecoin sector.
The broader Tron ecosystem has also witnessed considerable expansion, surpassing Solana to become the second-largest blockchain by total value locked (TVL). With over $8.2 billion spread across more than 30 DeFi protocols, Tron’s ecosystem continues to attract attention and investment from participants across the crypto landscape.
Tron’s SunPump Rivals Solana’s Pump.fun in meme coin Launchpad Performance
Tron’s new meme coin launchpad, SunPump, has quickly emerged as a prominent player in the meme coin space, challenging the dominance of Solana-based platform Pump.fun. Despite Pump.fun’s historical success in facilitating meme coin launches, SunPump’s introduction has disrupted the status quo.
At its peak, Pump.fun oversaw the daily launch of over 20,000 tokens, generating substantial revenue exceeding $2 million. However, the recent debut of SunPump has quickly overshadowed these achievements, with tokens like Sundog (SUNDOG) witnessing remarkable market capitalization growth to $190 million on Tron.
Meanwhile, legal disputes involving the Tron Foundation and Justin Sun continue to unfold in the United States. Last year, the Securities and Exchange Commission (SEC) filed a lawsuit against Sun and the foundation, alleging various violations related to the unauthorized sale of securities, market manipulation, and improper promotion of crypto assets, specifically Tron (TRX) and BitTorrent (BTT) tokens.
As the crypto industry navigates through these developments, the shifts in collateral backing for USDD and the emergence of competitive meme coin launchpads underscore the dynamic and multifaceted nature of the blockchain ecosystem.
