According to inventor Justin Sun, TRON wants to introduce its own algorithmic stablecoin named USDD, or decentralized USD, on May 5.
The 31-year-old crypto billionaire stated on April 21 that the USDD will be backed by around $10 billion in “highly liquid” crypto assets as collateral to assist maintain its US dollar peg. TRX, the TRON blockchain’s native token, will also contribute to the peg’s preservation.
Sun did not specify which assets would be used as collateral for his new cryptocurrency, Terra’s UST or Frax Finance’s FRAX.
To keep the dollar peg, the USDD uses ‘appropriate algorithms.’
He went on to explain how the USDD’s “correct algorithms” will keep the stablecoin’s peg to the dollar “independent of market volatility.”
“When the USDD price falls below $1, users and arbitrageurs can transfer $1 USDD to the system and receive $1 in TRX,” Sun wrote in an open statement on his personal website.
The TRON decentralized autonomous organization, or DAO, will handle the stablecoin. So, according to Sun, it will control a new reserve with a 30% interest rate.
USDD will be available on Ethereum (ETH) and the BNB Chain using the BitTorrent network’s cross-chain protocol. That’s, according to the TRON founder.
“Decentralized economies deserve decentralized money,” Terra founder Do Kwon remarked in response to the announcement. “Every blockchain will run on decentralized [stablecoins] shortly,” he continued.
Terra (LUNA) announced in March that it will purchase up to $10 billion in bitcoin (BTC) as part of its UST stablecoin’s partial backing. Sun’s TRON appears to be following a similar strategy, which is an interesting coincidence.
Sun establishes a decentralized reserve to ‘protect’ the cryptocurrency sector.
Meanwhile, Justin Sun announced the formation of the TRON DAO Reserve. That’s, which is similar in many ways to the US Federal Reserve. Of course, or other central banks tasked with reducing risk in financial markets.
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