USDD is scary

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USDD Ain’t Terra

It was a scary time on social media. If you missed it, you’re lucky. The conversation was that another stablecoin was crashing. Over the weekend, Tron’s stablecoin USDD dropped to ~$0.98. The Luna scares are unfounded for now. The fact that the token is also backed by an algorithm is the only way the two are similar. 

More than just an algo

• The way USDD has defined itself has been that every single token in circulation is roughly backed (~92%) by another equivalent dollar in cash reserves. 

• So, if hypothetically, there was ever a bank run on Tron, it will be able to pay back every single investor. 

• To reinforce those with sweaty palms, Tron has announced that its reserves were deeper than needed

To make things clearerTRON DAO Reserve has received 700 million USD Coin (backed by the Centre) to defend the USDD peg. Tron DAO Reserve is also pumping in another $2 billion to retain the 1:1 peg. The collaterals or asset backing have also been increased to 300%. 

More safety measuresJust last week, Tron also bought Bitcoins and TRX (Tron’s native token) worth $50 million to add to its reserves. For now, there is a ripple effect of USDD’s de-peg. TRX fell ~18% to $0.06 levels. 

Celsius Is Freezing

Crypto lending platform Celsius is freezing transfers, swaps, and withdrawals for all its 1.7 million accounts. That's locking up about $12 billion worth of capital. Celsius called it a result of ‘extreme market conditions’.

The business modelInvestors deposit their tokens to the company, not unlike a bank. The company promises high returns. Celsius uses that capital to lend to high-volume traders at steep interest rates. Now, the value of the tokens has crashed, and this has damaged Celsius’s liquidity structure. 

Now what?Following the freeze, its native token lost over 50%. It's trading at a mere $0.1954. Rival lending platform Nexus is interested in buying a chunk of Celsius’s collateralised loans.

In other newsJust like Celsius, ETH enthusiasts have a long wait ahead of them, again. Its lead developer recently announced another delay of the ‘difficulty bomb’ by two more months. This deployment has already been pushed five times before this. Difficulty bombs increase the time taken to verify/add new blocks.

NFTs For Profit

No one bought Bored Apes to celebrate art. According to a survey, most people who buy NFTs don’t do it intending to support artists. It’s more to flip and make money. Unfortunately, few people make actual cash. 

Street credAs many as 15% of the people who bought NFTs did that so they could boast that they owned those tokens. IRL parallel? Air Jordans, maybe? Just over one in ten actually bought NFTs for the pleasure of owning art and supporting artists. 

How much?Most people would only pay $50-$500 per NFT. But more than a fourth say they will pay $2,500+ for a single token. 

Staying putDespite the crypto sell-off, NFTs have stayed afloat. These tokens saw a total sales volume of $3.7 billion in May 2021 alone. The total market will exceed $800 billion by 2024 or what Tesla made in its energy business in a single quarter in 2021.

Lite & Luna Sink 

Litecoin is having a rough time. The Bitcoin spinoff is down 16% over the past 24 hours. It also slipped out of the top 20 crypto assets by market cap. 

What’s bothering LTC?Following two South Korean exchanges, Binance is now disabling Litecoin transactions. Litecoin recently activated the MimbleWimble Extension Blocks, an optional privacy upgrade that allows complete privacy. And this opens up money-laundering fears that plenty of regulators hold when it comes to crypto.  

ICYMI, Litecoin already lost $2 billion of market value in the crypto crash last month. 

Speaking of sinking…Do Kwon denied withdrawing $2.7 billion right before the Terra-LUNA crash. And now, 2,000 Terra investors are suing Binance. These investors believe that the exchange misled them about Terra’s financial stability. 

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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.