Sun says it can spend $ 5 billion to save crypto even when the USDD struggles to hold on

Sun said it could spend up to $ 5 billion on acquisitions, according to a report by The Block, but as Tron’s algorithmic stablecoin USDD is struggling to recover from a recent depegging, an analyst questions Sun’s resources.

“I do not think he is saying he has this capital for the benefit of the industry, rather, I think it is for publicity about how strong the foundation is in Tron,” said Marcus Sotiriou, analyst at digital assets broker GlobalBlock. “When it comes down to it, I do not think they would actually be able to spend $ 5 billion.”

In mid-June, just months after launch, the USDD fell as low as $ 0.93 and has yet to recover above $ 1.

Tron DAO pulled out 2 billion TRX, Tron’s original token, to protect the USDD stick on June 13. On June 17, DAO withdrew another 3 billion TRX to defend the point. Withdrawing TRX is part of a broader strategy to limit liquidity for traders who short TRX and prevent a collapse. TRX is used to redeem USDD, in the same way as the relationship between LUNA and UST.

According to Tron’s website, DAO has $ 2.3 billion in reserves – if the protocol uses a significant amount of reserves to rescue other members of the industry, USDD’s stability could be further threatened, Sortiriou said.

“If Tron’s stablecoin were in danger … it would have huge implications as it has now grown to a fairly significant size, but I do not think it would be so catastrophic because we have already had the collapse of Luna and UST, which was a total value of 100 billion dollars, “said Sotiriou. “It’s clear now how stable algorithms can not be fully trusted.”

Sun’s offer comes as Bankman-Fried continues to hand out money to help struggling sectors of the crypto industry as a result of the collapse of Three Arrows Capital and Celsius’ insolvency battle.

FTX agreed to buy Bitvo and Embed Financial, and the stock exchange extended a credit limit of $ 250 million to BlockFi. Alameda Research, founded by Bankman-Fried, lent $ 500 million to Voyager.

Reports suggest that FTX also aims to buy Robinhood, although Bankman-Fried, which personally bought a 7.6% stake in the investment app in May, has rejected these claims.

Sun did not immediately respond to Blockworks’ request for comment.

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