Justin Sun, the founder of TRON, announced the creation of an algorithmic stablecoin. Called USDD, the digital asset will be deployed on May 5, 2022, and will offer users a basic “risk-free” interest rate of 30% annual percentage yield (APY).
Related Reading| TA: Bitcoin Technicals Suggest Bulls Aim Sharp Move Above $42K
TRON users will have access to the stablecoin. However, they can also use it through Ethereum and Binance Smart Blockchain. According to the open letter, the digital asset will be launched in partnership with “major blockchain players” and will be “the most decentralized stablecoin in human history”. Sun said:
TRON has started a revolution by pooling its resources and creating USDD. This stablecoin is fully decentralized, underpinned with mathematics and algorithms.
The stablecoin will be managed by the TRON DAO and “other major blockchain institutions” and will maintain a 1:1 pegged to the U.S. dollar with, as Sun explained, “proper algorithms in a decentralized manner” and “by applying mathematics”.
The stablecoin will operate with a similar mechanism to Terra’s UST. When the stablecoin falls below its peg, users will be able redeem 1 USDD to 1 USD of TRX. If the stablecoin’s price rises above its $1 pegged, users can also do the reverse.
There will be four stages to the roadmap for stablecoin. Space is the name of the first stage. Next, there will be an International Space Station, Moon and Mars. Sun only provided details on the first two stages which mainly centered around USDD’s management and the strategies that will try to keep the stablecoin’s pegged.
What’s TRON Ultimate Goal With Their Stablecoin?
The launch of TRON’s stablecoin is part of a “self-imposed revolution” that will take these digital assets to their next stage, according to Sun. The movement is meant to offer users a way out from the centralized system. Sun said:
The decentralized stablecoin USDD will free holders from central authorities’ arbitrary impositions and eliminate all entry barriers. Unlike centralized institutions that may freeze or confiscate users’ funds at will, decentralized stablecoins effectively safeguard private property rights.
TRON claims that it wants to provide “equitable” access to financial services for people around the world. In that sense, Sun said TRON will be “one of the strongest cornerstones for the fifth freedom of humanity”.
The crypto community has been awash with controversy over this announcement. Some users accused Sun of copying Terra’s UST model.
Do Kwon (founder of Terraform Labs and CEO), welcomed the initiative. He also hinted at possible partnerships with TRON.
TRON is trading at $0.07, with an increase of 15% in the past 24 hours. The market sentiment and announcement may be influencing the cryptocurrency’s reaction.
Similar Reading| TA: Ethereum Could Stage Strong Rally If It Clears This Key Resistance
USDD’s launch will be a success and its users will receive the biggest APY in crypto for stake a stablecoin. This would surpass Terra’s Anchor Protocol’s 19% APY, and the upcoming NEAR’s 20% APY, if it launches.
