Image courtesy of Justin Sun’s Twitter.
- Justin Sun announced via his blog that TRON will be launching Decentralized USD (USDD) on the network, mirroring the tokenomics applied by UST on the Terra network.
- TRON DAO will raise $10 billion to peg the stablecoin on as an alternative to the UST model, with the news seeing TRX gain over 15 percent as most cryptos slipped.
After establishing one of the world’s largest blockchain networks, trying his hand in international diplomacy, getting into file sharing through BitTorrent and the exchange business through Poloniex, Justin Sun has now set his eyes on the stablecoin market. The TRON founder announced Thursday that he was launching a decentralized stablecoin that would be pegged to TRX, the native token on TRON, mirroring the model that Do Kwon has applied with the UST stablecoin on the Terra network.
Currently, the top two stablecoins in the market – Tether’s USDT and Circle’s USC – are centralized, meaning that the two organizations are in charge of minting new tokens and ensuring they are backed by US dollars in reserve (or other assets such as commercial paper).
Decentralized stablecoins have no central issuer and are governed by code. UST is a prime example, with users having to burn LUNA tokens to mint UST and vice versa.
It’s this market that Sun is targeting.
(1/5)🙌#TRON DAO joined hands with major #blockchain players to launch #USDD (Decentralized USD), the most #decentralized #stablecoin in human history.
💪 Today, we see the possibility of decentralizing the blockchain world’s most centralized territory. pic.twitter.com/S5gX3JpiVH
— H.E. Justin Sun 🅣🌞🇬🇩 (@justinsuntron) April 21, 2022
As Sun explained in a blog post, “When USDD’s price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD’s price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD.”
Sun: The Decentralized USD (USDD) is the future of crypto
USDD will officially launch on May 5 on TRON, but it will also be available on Ethereum and BNB Chain (formerly Binance Smart Chain) through the BTTC cross-chain protocol. Sun claims that he’s already talked to some prominent institutions in the blockchain space and they are ready to support USDD on the three chains.
TRON has already built a name as one of the world’s largest stablecoin networks. According to Sun, it’s the largest stablecoin network globally, housing $55 billion worth of assets. The amount of USDT on its network is larger than on Ethereum due to its lower fees and higher throughput.
And while USDD will be the first stablecoin whose value will be pegged algorithmically to TRX, the idea isn’t entirely new. MakerDAO was the first to hit the market with its DAI stablecoin, with new owners required to deposit other cryptos as collateral to mint DAI.
MakerDAO has been a relative success, as has the newest kid on the block Terra’s UST, but there are plenty of projects that have tried issuing a decentralized stablecoin that have flopped massively. The loophole usually lies in a sudden dip in the crypto upon which the stablecoin is pegged which sees some form of a bank run as everyone struggles to get out.
. @trondao is launching an algorithmic stablecoin with mint-and-burn mechanics called $USDD – mint and burn TRX, redeem against TRX
Decentralized economies deserve decentralized money – every blockchain will run on dect. stables soon
👏 @justinsuntron https://t.co/R4xuwtva6O
— Do Kwon 🌕 (@stablekwon) April 21, 2022
To prevent such a scenario, the Tron DAO, which was formerly known as the TRON Foundation, will raise $10 billion to solidify the peg for USDD. This is similar to Do Kwon’s Luna Foundation Guard which has now bought over a billion dollars in BTC to peg the UST to. The entity plans on scooping up other cryptos as well, starting with $100 million worth of Avalanche.
Read Mre: Terra founder Do Kwon plans to obtain $10B BTC for reserves
The DAO announced yesterday the launch of Tron DAO Reserve which shall oversee the backing of the USDD.
🎉#TRON DAO Reserve is officially founded!
💪The firmest protector of the blockchain industry and market. @trondaoreserve https://t.co/xBzFG5FHGh
— TRON DAO (@trondao) April 21, 2022
TRX has shot up following the announcements. It gained as much as 15 percent on the back of the news and is now just outside the top 20 with a market cap of $6.9 billion, even as other cryptos dipped.
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