<p><span style="font-weight: 400;">Tron's algorithmic stablecoin called Decentralized USD, known by its ticker USDD, slipped further from its supposed parity with the US dollar earlier today.</span></p> <p><span style="font-weight: 400;">USDD dropped to slightly below 0.97 earlier today before recovering to around $0.98. This marks the second time the stablecoin has slipped out of dollar parity since it was first founded earlier this year. In June, the stablecoin dipped all the way to $0.96 before bouncing back to its intended value.</span></p> <p><span style="font-weight: 400;">The drop in USDD’s price comes as liquidity for the stablecoin has shrunk on Curve – an Ethereum-based decentralized platform where traders can trade USDD against three other stablecoins within a liquidity pool. Currently,</span> <a href="https://curve.fi/#/ethereum/pools/factory-v2-116/deposit"><span style="font-weight: 400;">more than 80%</span></a><span style="font-weight: 400;"> of all funds in the liquidity pool are held in USDD alone, indicating that traders are preferring other stablecoins: USDT, USDC and DAI.</span></p> <div id="attachment_194000"class="wp-caption alignnone" style="max-width: 944px;"><img class="has-caption wp-image-194000 size-full" src="https://www.tbstat.com/wp/uploads/2022/12/usdd-price.png" alt="" width="934" height="852" /><p class="wp-caption-text"><span style="font-size: 8pt;">USDD Price Chart. Image: CoinGecko</span></p></div> <p><span style="font-weight: 400;">Functioning as a crypto-backed decentralized stablecoin, USDD can also be <a href="https://www.theblockcrypto.com/news+/161826/why-trons-usdd-is-unlikely-to-suffer-a-terra-like-death-spiral">issued</a> by the Tron DAO Reserve with tron coins and other collateral assets to maintain its value. While the stablecoin’s main collateral is tron, the Tron DAO Reserve also maintains additional collateral in the firm of bitcoin and centralized stablecoins.</span></p> <p><span style="font-weight: 400;">The Tron DAO Reserve</span> <a href="https://twitter.com/justinsuntron/status/1602224191037591552"><span style="font-weight: 400;">claims</span></a><span style="font-weight: 400;"> the USDD stablecoin is collateralized up to 200%, meaning that for each stablecoin, it claims to hold $2 worth of collateral. Its official website claims that USDD has a market capitalization of slightly over $725 million, backed by more than $1.45 billion in collateral reserves. </span></p> <p><span style="font-weight: 400;">As the stablecoin lost its dollar peg, Tron founder Justin Sun said on Twitter that he <a href="https://twitter.com/justinsuntron/status/1602224787161391105">purchased</a> more than 1 million in USDD, helping to protect the peg. </span><span style="font-weight: 400;">Sun shared a </span><a href="https://etherscan.io/tx/0x2a1400c01b36d27aaea7782006636170a2d27590f231418f4f964bb0b6cf5e4e"><span style="font-weight: 400;">transaction</span></a><span style="font-weight: 400;"> showing he swapped Circle-issued USD Coin (USDC) to USDD, via 1inch, a popular decentralized exchange aggregator on Ethereum. However, it’s unclear whether the assets used to buy back the USDD came from the Tron DAO Reserve or Sun’s personal assets. </span></p><br /><span class="copyright"><p>© 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.</p> </span>