Tron's TRX Bumps 27% as DAO Deploys $220M for Token Purchase
Founder Justin Sun has injected over $2 billion this week to support the Tron market.
Tron’s TRX token rose as much as 27% in the past 24 hours as its ecosystem stablecoin decentralized USD (USDD) inched closer to its intended $1 peg.
TronDAO, a decentralized autonomous organization (DAO) that oversees development on Tron, said in a Wednesday tweet that it sent over $120 million worth of USD coin (USDC) to Binance to “purchase TRX,” creating buying pressure among traders. The DAO later sent another $100 million for the TRX purchase, it said in a separate tweet.
TRX rose to over 6 cents in Asian morning hours before a brief sell-off at the time of writing. The token was trading at 4 cents in European hours Wednesday. Futures tracking the token saw some $8 million in liquidations, one of the highest among major cryptocurrencies.
Additional demand for TRX likely came as traders tried to bring USDD back to its peg amid a broader market run that saw bitcoin (BTC) and ether (ETH) rise over 6.3% and 11% in the past 24 hours.
USDD fell to as low as 91 cents this week amid contagion risks in the crypto market and weak macroeconomic sentiment. USDD is an algorithmic stablecoin on Tron and relies on an automated balancing mechanism that involves minting, or burning, of $1 worth of TRX to create 1 USDD.
Earlier this week, Tron founder Justin Sun deployed over $2 billion as traders seemed to short TRX. Funding rates – or the interest paid by traders to borrow capital for a trade – to short, or bet against, TRX futures reached a whopping 500%. Sun said the capital was intended to “fight them.”
TronDAO said in a tweet Tuesday that it added $650 million of USDC to its reserve to “safeguard the overall blockchain industry and crypto market.”
TronDAO seems committed to protecting USDD’s peg to seemingly avoid a repeat of the implosion of Terra stablecoin terraUSD (UST). It received some $500 million in USDC Tuesday to “defend #USDD peg” amid “current extreme market conditions,” per a tweet.
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