Tron founder Justin Sun said on Tuesday that the blockchain had capitalized on a recent drop in Bitcoin (BTC) prices and bought 500 tokens.
The tokens were purchased for $15.5 million, representing an average price of $31,031. BTC is currently trading around $31,900- having slightly recovered from an overnight crash to $29,000.
Tron said the move was to “safeguard the overall blockchain industry and crypto market,” although it was not immediately clear how the blockchain would do so. The tokens will be placed in the blockchain’s reserve for its stablecoin USDD.
But the blockchain isn’t the only entity capitalizing on a BTC crash. On-chain data shows that a slew of whales and institutions are buying into the token at bargain prices.
Tron founder Justin Sun said its BTC buy today was also inspired by a similar move by El Salvador President Nayib Bukele.
Tron is building its stablecoin reserve
Tron recently launched its own algorithmically-backed stablecoin, USDD, which it intends to back with a $10 billion reserve. The blockchain is also offering a staggering 30% yield on the token.
So far, the blockchain has gathered several notable crypto entities to contribute to its USDD reserve, including Alameda Research, and crypto unicorn Amber Group. While the chain has not disclosed the total value of its reserve, it intends to cap it off at $10 billion.
But Tron’s efforts to build and back an algorithmic stablecoin may be happening during a difficult time for the space, especially given with the recent failure of Terra’s UST.
Algorithmic stablecoins undermined by UST crash
UST prices de-pegged heavily from the dollar during the latest crypto crash, going as low as $0.6. The minting and burning mechanism to protect the $1 peg had largely failed, and saw Terra dump the entirety of its BTC holdings to support the token.
The move has drawn widespread ire from the crypto community. It has also largely undermined the viability of an algorithmic stablecoin, given that UST is the largest player in the space.
USDD’s similarity to UST has already drawn comparisons between the two. With the recent crash, scrutiny of USDD is likely to increase.
Still, USDD appears to have largely maintained its peg through the recent market crash.
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