The Tron protocol, led by justin sunis about to launch its own algorithmic stablecoin, USDD.
The Tron network will soon have its own algorithmic stablecoin, USDD
Following the successes of DAI on Ethereum, and especially UST on Terra, it will be possible to trade TRC-20 tokens worth $1 eachbut without direct guarantee in USD.
It is worth noting that the success of the UST algorithmic stablecoin on Terra over the last 12 months has been resounding. Now capitalizes more than Binance USD (BUSD) and Shiba Inu (SHIB)while just a year ago it capitalized less than a hundredth of its current value (120 million as of April 2021, compared to almost 18 billion today).
Surely this incredible success is fueling other similar projects like USDD.
The USDD announcement was made by Tron founder Justin Sun, now the Grenada ambassador, on his official Twitter profile.
Sun revealed that USDD Network will provide custody services for the $10 billion of liquid assets used as reserve in the initial phase, while TRON DAO Reserve will manage the interest rate which is now 30% per annum.
These algorithmic stablecoins are based on loans and are very successful because they promise very high annual interest rates to lenders.
These interest rates are not fixed and they vary according to the relationship between supply and demand, since they serve to keep the value of the token stable.
USDT on Tron
Tron is also the only network where the world’s most widely used stablecoin, USDT, conducts more transactions.
In fact, the speed of execution and, above all, the very low transaction costs have allowed it to outperform Ethereum in this particular area.
According to Justin Sun, stablecoins have now entered a new era.
In fact, while classic fiat-collateralized stablecoins like USDT are necessarily centralized, algorithmic stablecoins can be decentralized.
Sun promise that USDD (decentralized USD) will be:
“the most decentralized stablecoin in human history.”
In fact, he flatly states that the current stablecoin era 3.0 will be driven by the USDD itself.
While this may be true on paper, it remains to be seen how much real competition it will be able to represent for UST in the crypto markets. For now, it seems to be able to offer superior returns, and they are likely to bet on this to try and outperform the Terra stablecoin.
Tron is about to issue an algorithmic stablecoin on its network and on the Ethereum and BNB Chain protocols.
USDD within the DeFi ecosystem
USDD on TRON is expected to go live on May 5, 2022, and will also be available on Ethereum and BNB Chain.
Its roadmap is divided into four phases, 1.0 Space, 2.0 ISS, 3.0 Moon and 4.0 Mars.
In phase 1.0, management will be entrusted to TRON DAO Reserve and other blockchain institutions. For now, Sun has not given more details on the next phases.
In reality, it could be extremely difficult to take market share from UST, because it is mainly used in DeFi protocols on Terra.
Therefore, USDD will apparently not be a direct competitor and will need to be established in DeFi protocols on Ethereum, BNB Chain and TRON.
It will therefore be a remote comparison, on different chains and protocols, but with similar services. It is worth noting that UST is now in use on other chains as well, and it cannot be ruled out that USDD sooner or later arrives at Terra.
So initially the direct comparison will be limited, but it could be expanded. It remains to be seen if USDD and Tron will actually be able to compete with UST and Terra, or if the latter has already become so entrenched that it is effectively impregnable.