Right now, the world needs yet another algorithmic stablecoin. You may not know it but Tron sees it necessary to push USDD stablecoin to the public as quickly as possible. And for that, they are cooking with pretty much the same recipe as Terra USD (UST). But, they say they have a solid plan to prevent USDD stablecoin having the same collapse as UST. Be that as it may, the Tron network has seen massive success as they managed to attract the second largest total value locked in the crypto industry. Primarily, the 23% returns on USDD stablecoin has managed to quickly increase the network TVL. And, Tron is planning on doubling down in their UST looking algorithmic stablecoin project.
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USDD Stablecoin
While the Terra USD crash is still trending, Tron founder Justin Sun has addressed concerns regarding USDD stablecoin. Algorithmic stablecoins are currently facing terrible reputation following Terra USD (UST) crash. Last month, UST stablecoin lost its peg to US dollar and collapsed. Subsequently, LUNA crashed and the market spiraled into a massive sellout. In total, the UST collapse wiped out $40 billion in crypto market capitalization.
Prior to the collapse, Tron decentralized autonomous organization (DAO) launched a similar project named Decentralized USD (USDD). The USDD stablecoin utilizes a similar algorithmic mechanism that enables the network to operate without a dollar reserve.
Justin Sun told Bloomberg that they want to stay “overcollateralized” to avoid the same fate as Terra USD.
“This has been in the plan, but Terra/Luna definitely accelerated and prioritized this for our team. We want to have USDD to be overcollateralized, which I think will make market participants more comfortable about using us in the future.”
It’s Different This Time!
Sun believes that the Terra USD fiasco could have been easily avoided. According to Sun, the Luna Foundation Guard, a non-profit organization was passive and could easily predict the meltdown.
According to founder, Tron DAO will tackle this project differently.
“Tron DAO will be very active in the market and less predictable. You make the market feel comfortable, but without telling too much information.”
Currently, USDD has a collateralization ratio of 222% according to Tron DAO website. With that, USDD has a supply worth about $667.5 million.
In terms of reserves, Decentralized USD has reserves worth over $815.5 million at the time of writing. The reserve includes, 14,040 Bitcoin worth around $423.3 million, 1.9 billion Tron (TRX) worth $152 million and $240 million worth of stablecoin Tether (USDT).
What do you think about Decentralized USD (USDD) project? Tell us down in the comment section.
