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DeFI: Justin Sun announces Tron’s algorithmic stablecoin, USDD

Justin Sun, founder of TRON, announced today on his Twitter account the launch of a new algorithmic stablecoin on the TRON blockchain: USDD.

The approach is clear: Tron wants to emerge ahead of Terra and its UST token as the next biggest decentralized currency hub. To achieve this goal, Tron DAO has teamed up with many major players in the blockchain ecosystem to create USDD. This token will be stabilized through the application of mathematics and algorithms unlike the actual stablecoins backed by USDD.

The system is similar to Terra’s UST: USDD will be pegged to the underlying token, TRX, and issued in a decentralized manner. When the price of USDD is below 1 USD, an arbitrage opportunity is created by sending 1 USDD to the system to receive 1 USD of TRX. When the USDD price is above 1 USD, users can send 1 USD of TRX to the decentralized system and receive 1 USDD.

USDD on TRON is expected to be issued and released on May 5, 2022. It will also be available on Ethereum and the BNB Chain through the BTTC cross chain protocol.

If the success of Terra and especially of the UST comes largely from the Anchor protocol and its 20% interest, Sun has understood it very well. The TRON DAO, in charge of the USDD, is going to set up a reserve as well as a protocol allowing users to benefit from 30% of annual interests according to Justin Sun.

This will put Terra and Anchor Protocol in the shade…

“Upon its inception, the TRON DAO Reserve will set its risk-free base interest rate at 30% per annum and help other decentralized and centralized organizations that accept USDDs to implement consistent interest rate policies.”

Justin Sun

This pool will benefit from up to $10 billion worth of liquid assets, all through TRON DAO, similar to Terraform Labs’ recent plan with Bitcoin and Avalanche.

Do Kwon (Terra) seemed thrilled with the announcement, however. According to the billionaire, the democratization of algorithmic stablecoins is great news for the ecosystem. The collaboration of the two projects is happily displayed on Twitter and a pool of liquidity including the 2 stablecoins should quickly see the light:

The little one remains NEAR Protocol, whose stablecoin USN, should see the light of day in the coming weeks.

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