Founder of TRON Justin Sun announced the launch of an algorithm stablecoin on this network. 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).
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The stablecoin will be available on TRON, but users can access it from Ethereum and the Binance Smart Chain. 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 is starting a self-imposed revolution, pooling all its resources to create USDD, a fully decentralized stablecoin underpinned by mathematics and algorithms, bringing the development of stablecoin to the next level.
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. Users will be able to redeem 1 USDD for 1 USD worth of TRX when the stablecoin drops below its peg. They can do the opposite if the price of the stablecoin rises about its $1 pegged.
The stablecoin will follow a four-stage roadmap. The first stage will be called Space, the following International Space Station (ISS), then Moon, and finally 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. This movement is supposed to provide users with a way out of the centralized system. Sun wrote:
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”.
This announcement has caused controversy in the crypto community. Some users accused Sun of copying Terra’s UST model.
The founder of Terra and CEO at Terraform Labs, Do Kwon, welcomed the initiative and hinted at a potential partnership with TRON.
At the time of writing, TRON trades at $0.07 with a 15% rally in the last 24-hours. The cryptocurrency is possibly reacting to the announcement and the general sentiment in the market.
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If launched successfully, USDD will provide its users with the largest APY for staking a stablecoin in the crypto ecosystem. This would surpass Terra’s Anchor Protocol’s 19% APY, and the upcoming NEAR’s 20% APY, if it launches.