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Tron’s TRX token had increased by up to 27% before plunging a few hours ago. This was due to stablecoin, USD (USDD) has moved closer to its targeted $1 peg.
TronDAO, a decentralized autonomous organization (DAO) that supervises Tron development, stated in a tweet recently that it delivered more than $120 million in USD currency (USDC) to Binance to “purchase TRX,” placing purchasing demand on traders.
Tron DAO Contributes $100M For TRX Purchase
According to the next tweet, the DAO then contributed another $100 million for the TRX purchase.
TRX gained more than 6 cents in the early hours but had a minor sell-off at the time of reporting. Futures contracts reflecting the cryptocurrency witnessed $8 million in liquidations, which was one of the biggest among crypto assets.
TRX is witnessing an increase in demand as traders attempted to return USDD to its peg during a massive market spike where Bitcoin (BTC) and Ethereum (ETH) soared over 6.3% and 11%, respectively, before retracing back.
At the start of this week, the USDD plummeted to as low as 91 cents due to the crypto market outbreak and bad macroeconomic outlook. USDD is an algorithmic stablecoin on Tron which uses an automated balancing technique. This requires issuing new or burning $1 worth of TRX to generate 1 USDD.
Tron creator Justin Sun spent almost $2 billion earlier in the week when traders were mostly short of TRX. TRX futures funding rates, charged by traders to acquire funds for a deal – reached a stunning 500%. Sun stated that the capital was built to “combat them.”
Funding rate of shorting #TRX on @binance is negative 500% APR. @trondaoreserve will deploy 2 billion USD to fight them. I don't think they can last for even 24 hours. Short squeeze is coming. pic.twitter.com/VRExM6UK70
— H.E. Justin Sun 🅣(@justinsuntron) June 13, 2022
TronDAO asserted in a tweet that it has placed $650 million more in USDC to its fund in order to “protect the broader blockchain ecosystem and crypto market.”
TronDAO appears to be focused on defending USDD’s peg in order to prevent a replay of Terra stablecoin terraUSD’s meltdown (UST).
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