Tron’s Stablecoin USDD Deviates From the $1 Peg, Justin Sun Says Team Deployed More Capital

December 12, 2022 Bitcoin.com

Biggest Movers: ALGO Nearly 10% Higher, TRX Extends Recent Gains

November 19, 2022 Bitcoin.com

Crypto Strategist Predicts Big Drop for Bitcoin (BTC), Ethereum (ETH), TRON (TRX) and Two ETH Rivals

November 11, 2022 The Daily Hodl

Tron-based tokens sell at 1200% premium as FTX users scramble to withdraw

November 11, 2022 Coin Telegraph

btt

The JST token in particular is trading for a premium of around 1,200%, while BTT and TRX have inflated at least 500% apiece.

Tron-based tokens such as JUST (JST) have surged as much as 1000% on FTX, as users scramble to find ways of extracting locked-up liquidity from the beleaguered exchange.

At the time of writing, Tron’s native token TRX is trading at roughly $0.33 on the FTX exchange, more than five times its current market price, according to CoinGecko.

Meanwhile, BitTorrent (BTT), JUST (JST) and the Sun Token (SUN) are trading on the exchange at premiums ranging from 525% to 1,196% compared to the market price. As it stands, the prices are extremely volatile and constantly changing.

The overinflation of Tron-related tokens comes after a Nov. 10 deal was struck which allows holders of assets such as TRX, BTT, JST, and SUN to withdraw funds.

This move has resulted in traders on FTX bidding up the price of Tron-related tokens to be able to recoup their locked funds. However, buying the tokens at the inflated price will likely lead to significant realized losses should they then sell it on any other exchange.

This means FTX customers get pennies on the dollar while Tron makes a ton of money.$TRX will be bid up on FTX as that is the only way to get out, but once people withdraw it they'll have to sell it at market price, taking a huge loss on their original holdings. https://t.co/NkbXatmxXR
— leoglisic.eth (@Leo_Glisic) November 10, 2022

Limited withdrawals

FTX’s website says that it is currently unable to process withdrawals, with customers in the Bahamas where the company is based understood to be the only ones that can withdraw from the exchange.

Subsidiary FTX.US has also suggested that it could soon follow the same path by halting withdrawals.

It is also worth noting that FTX disabled new deposits of Tron-based assets as the withdrawals went live.

Twitter users such as @davidiach on Nov. 11 have mused that FTX users could potentially get around the Bahamian loophole in particular by getting a local citizen to buy a low-cap asset on FTX, have them dump it on the overseas user and then get the Bahamian to ”withdraw the profits” for them for a fee.

One way to withdraw large amounts of money now is:
1. Have a Bahamian buy a very low liquidity coin on FTX
2. Pump it hard and let the Bahamian dump that coin on you.
3. Have the Bahamian withdraw the profits and give you the money minus a fee. https://t.co/Nei3zT3HMd
— David Iach (,) (@davidiach) November 10, 2022

However the feasibility of such appears to be in doubt, given that the Bahamas Securities Commission (BSC) reportedly froze the assets of FTX Digital Markets (FDM) and "related parties" on Nov. 10 and suspended the firm’s registration in the country.

TRX’s USD Exchange Rate Jumps 270% Higher on FTX After Exchange Brokers Deal With Tron

November 11, 2022 Bitcoin.com

Tron’s stablecoin USDD loses dollar peg on suspected selloff by Alameda Research

November 10, 2022 Coin Telegraph

Alameda Research

Wallets associated with Sam Bankman-Fried's Alameda Research could be behind the dollar de-peg, alleges Tron's founder.

In April 2022, the Tron network launched USDD, a token pegged to the U.S. dollar, as an "over-collateralized stablecoin," meaning its likelihood of slipping below $1 should be lower due to excessive reserves backing its valuation.

USDD stablecoin slips below $1 peg

But it was not enough to keep USDD's price anchored to $1 on Nov. 8 when some whales dumped over 11 million USDD tokens to seek exposure in rival stablecoins Tether (USDT) and USD Coin (USDC). A day later, USDD's price fell to as low as $0.96, followed by a modest recovery to $0.98 on Nov. 10.

*USDD price performance on a 24-hour adjusted timeframe. Source: Messari*

The selling pressure was visible more broadly in the USDD liquidity pool on Curve's decentralized finance protocol. As of Nov. 10, the pool was heavily imbalanced, holding nearly 82.50% in USDD and the rest in USDT, USDC, and DAI stablecoins.

Tron founder Justin Sun speculates that Alameda Research, a crypto hedge fund headed by FTX's Sam Bankman-Fried, could be the whale dumping its USDD holdings to avoid insolvency. Alameda's balance sheet reportedly was 50% FTT (FTT), FTX's native token that has recently fallen more than 90%.

I think probably Alemeda just sold their USDD to cover the liquidity of ftx exchange. The pool currently is back with a healthy rate. pic.twitter.com/oSIzUNqE0Z
— H.E. Justin Sun (@justinsuntron) November 9, 2022

Miscalculated collateral reserves

USDD is issued by Tron DAO Reserve (TDR), which also serves as the custodian of its collateral. TDR is primarily responsible for selling the collateral to maintain USDD's peg in the event of a sell-side shock.

In theory, USDD appears sufficiently backed by a $2-billion pool of crypto collateral in the form of Bitcoin (BTC), Tron (TRX), and USDC, with the reserves reportedly outweighing the stablecoin supply by over 283%.

*USDD supply versus collateral. Source: USDD.io*

But there's a catch.

Currently, almost all the stablecoin collateral worth in TDR's reserve wallets are staked and earning yields in JustLend, the largest lending protocol in the Tron ecosystem by total-value-locked (TVL). Meanwhile, 99% of TRX collateral is locked inside a "staking governance" contract.

TDR also appears to be incorrectly including burnt TRX worth over $725 million as collateral. Overall, that leaves the DAO with about $600 million worth of USDC and $236 million worth of BTC in its liquefiable reserves.

In other words, an almost 113% collateral ratio versus the 283% boasted.

Bitcoin, TRX prices slide

USDD's collateral ratio could fluctuate further as its reserve assets, BTC and TRX, undergo price declines.

Notably, BTC's price has plunged by more than 22% week-to-date to around $16,500 in a crypto market meltdown led by the Alameda-FTX fiasco. On the other hand, TRX wiped approximately 12% off its valuation in the same period, trading at around $0.05 on Nov. 10.

*TRX/USD weekly price chart. Source: TradingView*

The Tron token now eyes a break below its support long-standing support confluence, comprising its 200-week exponential moving average (200-week EMA; the blue wave) near $0.052 and its 0.236 Fib line near $0.055.

This may push TRX on an extended decline toward the $0.022-$0.030 range (marked in red in the chart above). This area was instrumental as a consolidation channel in August 2020-January 2021 and January 2019-July 2021.

Furthermore, it served as support between February and November 2018.

At the same time, Bitcoin has entered the breakdown phase of its prevailing inverse-cup-and-handle pattern, now eyeing $14,000 as its primary downside target.

*BTC/USD weekly price chart. Source: TradingView*

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

TRX