Tron co-founder Justin Sun has announced that the blockchain will invest $2 billion after the funding rate for shorting TRX tokens hit a negative 500% APR.
The announcement comes after Tron’s USDD dropped to $0.98 to a record low on Monday. The tokens were unveiled on May 5 as an algorithmic stablecoin tracking the USD price.
The network has been cushioning against potential volatility in the market that can cause the collapse in the same way as Terra. Sun maintains that USDD will remain overcollateralized.
Tron’s native TRX tokens are currently trading at 16% lower in the cryptocurrency rout.
The Tron DAO announced over the weekend that it had acquired $50 million worth of Bitcoin and TRX. This follows a reserve of cryptocurrencies and other stablecoin that has been set to overcollateralize the stablecoin.
Tron has also announced that it will start unveiling real-time updates on the collateral ration on the Tron DAO Reserve site starting from June 5. The ratio was recorded at 280% on Monday.
A short squeeze happens when traders taking a short position are forced to close their position by purchasing the underlying assets.