NEW DELHI (CoinChapter.com) — The Tron decentralized autonomous organization (DAO) reserve has announced plans to buy $1 billion in USDT. The DAO, responsible for developing the Tron network and managing the USDD stablecoin, stated that the purchase was a cushion against a market decline.
The DAO had previously pledged $300 million in USDT in a tweet. However, the organization raised its pledge by $700 million after 23 minutes. In addition, the Justin Sun-backed DAO topped up its algorithmic stablecoin reserves “to safeguard the overall blockchain industry and crypto market.”
Meanwhile, Tron DAO stressed that they would hold the USDT on centralized exchanges. However, the move comes when investors’ trust in centralized entities is at an all-time low. To recap, the failure of Celsius, Three Arrows Capital, and Hodlnaut has eroded users’ faith in the crypto sector.
With FTX possibly staring down the barrel of insolvency, the situation eerily resembles a Terra-esque collapse that triggered the current crypto bear market.
Also Read: Ethereum Price (ETH) Recovery Could Turn Attractive To Sellers, USDT Depegs
Before acquiring $1 billion in USDT, Tron’s native stablecoin USDD (decentralized USD) was backed by over $200 million in Bitcoin (BTC), $442 million in USD Coin (USDC), and some 10 billion Tron (TRX) tokens.
Tether Suffers De-peg Scare
Tether’s stablecoin USDT suffered a de-pegging scare after USDT hit a low of $0.971. The speculation gained traction after evidence emerged of troubled crypto exchange Sam Bankman-Fried’s FTX and sister company Alameda Research shorting USDT.
FTX and Alameda are under intense scrutiny from the crypto community and regulators. Moreover, the FTX contagion has resulted in major cryptocurrencies registering massive losses. Bitcoin (BTC) price fell over 14% on Nov 9 to close at $15,877, a level the token last reached in Nov 2020.
Ethereum (ETH) price suffered too, with the token closing at $1,099 on Nov 9. The market recovered on Nov 10, but investor confidence remains low. The fear and greed index currently sits at 22, denoting extreme fear among investors.
Meanwhile, Tether CTO Paolo Ardoino commented on the USDT price movement, stating, “Tether processed ~700M redemptions in last 24h. No issues. We keep going.”
Additionally, analyst Duo Nine highlighted that the de-peg is irrelevant as long as “Tether is able to redeem every 1 USDT for 1 USD.”
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