The Tron DAO Reserve will purchase 1 billion USDT to fight short sellers after the tether, world's biggest stablecoin, slipped below its peg to the U.S. dollar.
"To safeguard the overall blockchain industry and crypto market, Tron DAO Reserve will purchase a total of 1 billion USDT," the tweet read. It added that the balance of USDD, Tron's own stabelcoin, might be affected, and all the reserves will be in centralized exchanges.
Tether fell 1% below its peg to the dollar earlier today amid ongoing market tumult related to crypto exchange giant FTX. Tether was trading at $0.9908 at the time of writing, according to data via Coinbase.
Furthermore, liquidity for stablecoin swaps on the Curve 3pool hit its lowest level since the luna collapse in May today. Traders continue to swap tether for other stablecoins, namely dai and USDC, which led to tether losing parity with the dollar.
Tron DAO's buying might lead to a short squeeze, when traders that bet on a decline are forced to close their positions by buying back the underlying token. Tron deployed similar tactics in June following the TerraUSD de-peg and the ensuing market turmoil.
Paolo Ardoino, Tether's CTO, said earlier that Tether had processed $700 million worth of redemptions in the last 24 hours. "No issues. We keep going," he tweeted.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.