Are USDD and USDN losing the dollar bond? So are more stablecoins now crashing after the dramatic Terra collapse?
USDD and USDN Depeg in prospect?
After the FED announced the increase in the key rate in early May, huge price losses developed in the crypto market. Subsequently, even the entire Terra ecosystem crashed and once again significantly deepened the losses.
If you currently take a look at the price developments of Bitcoin and many other cryptocurrencies, you get the feeling that the event is currently being repeated.
Because: The European Central Bank (ECB) would like to follow the example of the US Central Bank and also increase the key interest rate from July. However, compared to their American counterparts, they are only planning an increase of half, and therefore 25 basis points (0.25 percent).
Shortly after the announcement, the crypto market falls. BTC drops to the current $23,800 and stablecoins are under pressure again.
Among the top 10 stablecoins, the native algorithmic stablecoin of the Tron blockchain (USDD) and the equivalent of the Waves blockchain (USDN) are losing particularly badly.
Meanwhile, a rumor is spreading on Twitter that USDD and USDN have already lost their dollar bond. This element is also reminiscent of the demise of the TerraUSD.
In fact, the market value of the USDD is 99 dollars cents, the neutrino dollar is even only 97 cents. Although there is a noticeable price difference to the US dollar, you should not panic, however.
A look at the history of stablecoins shows: these fluctuations are still completely within the framework. Only panic selling by large amounts of the tokens could potentially damage the prices extremely.
Are stablecoins safe? – Also lose Tether (USDT) and USDN
After the UST, further stablecoins are clearly under pressure. Tether and USDN are losing on the dollar, putting the crypto market at risk. Nevertheless, there should be no reason for hasty panic.
How low can a stablecoin fall and still survive? We show you historical data!
USDD increases coverage to 300 percent
USDD and USDN were created on comparable DeFi blockchains following the example of TerraUSD. One certainly does not want to imitate the crash of the former mission statement.
Justin Sun, founder of Tron, therefore announced that he would provide the USDD with a value deposit of 130 percent. So the goal is to accumulate more assets in a reserve than the USDD reaches in market capitalization.
Meanwhile, the actual goal is clearly exceeded.
Due to the extreme market conditions, the TronDAO receives 700 million USDC to defend the binding of the USDD.
For the market extreme condition, @trondaoreserve has received 700 million USDC to defend #USDD peg. Now USDD collateralization rate is nearly 300%. https://t.co/ULYBfjt2i0
– TRON DAO Reserve (@trondaoreserve) June 13, 2022
This is according to a tweet from the Tron DAO Reserve (TDR). Through this measure, the USDD achieved an over-assurance of 300 percent. At the time of writing, the coverage is 279.9 percent, according to the real-time transparency report of TDR.
The real goal of the 130 percent protection was to surpass the DAI with its targeted coverage of 120 percent and thus attract more attention.
Is it going downhill for cryptos?
It can also be seen elsewhere that the fear on the crypto market is currently increasing again. The market capitalization of the USDT has dropped by a whole $ 36 million since the morning hours.
Tether: Market cap drops by $36 million in about 12 hours.
Once again, the USD Coin is considered a safe haven by many investors. Its market capitalization increased by $ 19 million over the same period.
The same period: The USD Coin is growing by 19 million US dollars.
The algorithmic competitors USDD and USDN seem to have already survived the worst. Their prices are approaching the US dollar again as the trading volume increases.
The June meeting of the FOMC – the committee that determines the US key interest rate – will begin tomorrow. The meeting will end on Wednesday. A further increase in the key interest rate could further drive down the currently negative rates.
Whether there will be an interest rate increase cannot be guaranteed in advance. However, it is suspected that there will be a third increase by the FED this year – according to experts, in the late year.
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