Some decentralized stablecoins have seen an unprecedented rise in value after Tron’s USDD debut. DAI, the stablecoin from Makerdao, has soared to the top of the market value rankings thanks to its use of over-collateralization to maintain a dollar peg. DAI’s market value has been overtaken by Terra’s UST in recent years, and the latter provides an algorithmic reserve approach to maintain its dollar peg. This makes Terra’s UST stablecoin the third-largest stablecoin venture with a market value of $17.89billion.
As Sun revealed on Thursday, USDD would be backed by $10 billion in crypto reserves to begin with, making it very similar to Terra’s UST. “In the Stablecoin 3.0 era, USDD will not depend on any establishments for redemption, administration, and storage,” states a blog post on hejustinsun.com. For redemption, maintenance, and storage, USDD will no longer depend on any centralized institutions in the Stablecoin 3.0 era. In place of this, “it will gain complete decentralization on the blockchain.” USDD will be based on “TRX and released decentralizedly,” according to a blog post.
Users and arbitrageurs may send USDD to the system and get TRX worth $1 when the USDD price falls below $1. Terra’s inventor, Do Kwon, addressed the criticism of the new USD stablecoin made by Justin Sun and Tron on Twitter, referring to it as a “UST lookalike“. This should be self-evident, but Do Kwon pointed out that Tesla benefits from additional automobile manufacturers switching to electric powertrains.
Additionally, UST benefits from additional blockchains issuing their own sovereign stablecoins. Assisting as many groups as feasible become self-sufficient will be the genuine moon. In another tweet, Do Kwon congratulated the Tron DAO and Justin Sun. Terra’s founder said:
USDD, a new algorithmic stablecoin from Tron DAO, will have a mint-and-burn mechanism that will allow users to exchange their TRX for USDD. Economies that are decentralized deserve decentralized money, and eventually all blockchains will function on [decentralized] stables.
On Thursday, social media users discussed Tron’s new stablecoin. As a result, some individuals have proposed that the USDD project should also contain bitcoin (BTC) in addition to TRX, which it will be able to manufacture and burn. The Tron DAO reserve would also “set its basic risk-free interest rate to 30% per annum,” as Sun remarked in a tweet on Thursday.