According to Justin Sun’s statement today Tron (TRX), As of May 5 USDD will have its own stablecoin named
However, the new stablecoin Tether (USDT) and USDC It has been announced that it will not use traditional working mechanisms like
Instead USDD is the same TerraUSD (UST) and on Frax Finance (FRAX) It will be an algorithmic stablecoin as it is.
(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
— HE Justin Sun 🅣🌞🇬🇩 (@justinsuntron) April 21, 2022
TRX Will Be Used to Keep USDD Stable at $1
The stablecoin will ensure that its price, which will be indexed to 1 dollar, remains stable with the mechanism used in other algorithmic stablecoins. Justin Sun, new cryptocurrency Here’s how he explained how he would stay steady at $1:
“When the price of USDD goes below $1, users and arbitrageurs will be able to receive $1 worth of TRX by sending 1 USDD to the system. When the price of USDD rises above $1, users and arbitrageurs will be able to receive 1 USDD by sending the $1 TRX token to the system.”
The founder of Tron claimed that thanks to this algorithm of USDD, its index to the US dollar will be maintained regardless of market conditions.
#USDD @usddnetwork 👀 pic.twitter.com/x52ZXyTWsA
— HE Justin Sun 🅣🌞🇬🇩 (@justinsuntron) April 21, 2022
New Stablecoin To Have $10 Billion Collateral Reserve
It has been learned that a decentralized autonomous organization (DAO) called Tron DAO will manage the stablecoin on the blockchain. According to Sun, Tron DAO will manage the reserve with an interest rate of 30%.
In addition, it was learned that Tron DAO will also use $10 billion of high liquid assets as collateral to support USDD.
This plan is thought to be similar to Terraform Labs founder and CEO Do Kwon using $10 billion worth of Bitcoin to support UST.
“Blockchain Industry Leading Assets Will Be Used As Collateral”
Justin Sun did not say which assets he would use as collateral, but did use the term “highly liquid assets, which are the first of the blockchain industry.” These assets will be used to maintain the stablecoin’s fixed price to the US dollar.
Terra CEO Kwon gave a message of support for the announcement of Tron’s new stablecoin. Kwon said in a statement that “decentralized economies deserve decentralized currencies.”
In addition, Kwon claimed that such decentralized stablecoins will soon be available on every blockchain.
. @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. stable soon
👏 @justinsuntron https://t.co/R4xuwtva6O
— Do Kwon 🌕 (@stablekwon) April 21, 2022
According to Sun’s announcement, USDD will also work on Ethereum and BNB Chain after the BitTorrent network is implemented by the cross-chain protocol.
Sun cited the growing USDT transaction volume on the network as the reason for the creation of a new stablecoin on the Tron network.
Used on the TRX network, USDT is often used by arbitrage traders who want to pay low transaction fees.
*Not investment advice.