Cryptodollar USDD rate rose to $1 million on a major exchange

Posted 22 July, 2022

On the KuCoin cryptocurrency exchange, a  short squeeze (a sharp short-term increase) of the USDD stablecoin of the Tron blockchain took place: the price of the token reached 999.65 thousand USDC.

USDD is an algorithmic stablecoin issued by the Tron platform on May 5, 2022. The stablecoin is backed by more than 317% as of July 21 with such assets as TRX, BTC, USDT, and USDC, according to the issuing company.

In June, USDD lost its peg to the US dollar, and its rate fell to $0.84. Then a large volume of short positions was opened - traders bet on a further decline in quotes and a possible depreciation of the token. But the price of the stablecoin has stabilized.

Since the coin was able to gain a foothold at $1, there was a cascade of liquidations on the KuCoin exchange, the platform forcibly closed short positions by buying back USDD. However, there were not enough coins to sell in the glass, which caused the exchange mechanism to buy back USDD at an inflated price. So, on July 21, in a pair against USDT, the stablecoin rate at the moment rose to $1.2, and in a pair against USDC, where there is much less liquidity, it soared to almost $1 million.

The reason for this could be manipulation, said private trader Dmitry Fomin. According to him, technically, the attacker could deliberately buy out a large number of coins in order to inflate the USDD rate and thereby cause a short squeeze.

The expert recalled that in June, Justin Sun, the founder of the Tron network, warned about a possible short-squeeze, but then he assumed that the event could happen with another cryptocurrency of the network - TRX (Tron).

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