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Tron launches a decentralized algorithmic stablecoin called USDD

 


Tron's USDD will be more like Terra's UST, targeting $10 billion in reserves, founder Justin Sun said.


Tron will launch its decentralized algorithmic stablecoin called USDD (Decentralized USD) on May 5, 2022. Tron founder Justin Sun announced the development in an open letter .


The new stablecoin will also be available on Ethereum and the BNB chain, with this being possible via Tron's BTTC cross-chain solution.


As an algorithmic stablecoin, USDD differs from traditional stablecoins such as Tether (USDT) or USD Coin (USDC). As such, it is not backed by cash or other financial assets, but by cryptocurrencies.


The USDD stablecoin is pegged to TRX as its underlying asset and features the “mint-and-burn” mechanism, similar to that of Terra's UST. The mechanism should ensure that TRX is burned to allow USDD to be minted.


Terra CEO Do Kwon has identified the "mint-and-burn" functionality and Tron's move to adopt USDD as a signal of what lies ahead in terms of the future of decentralized economies. And it's a scenario critics don't understand, he added.


“ Decentralized economies make decentralized money – every blockchain will soon run on Dect stables. ”



“ As the most decentralized stablecoin in human history, USDD will make finance accessible to all through the application of mathematics and algorithms. It will exist permanently without relying on any centralized entity, ” TRON DAO tweeted .


$10 billion worth of reserves

Support for USDD initially falls to TRON DAO Reserve, a decentralized autonomous organization set to provide custody service for a $10 billion reserve. The reserve, according to Sun, will “ comprise highly liquid assets raised by blockchain industry initiators. ”


The early management of the stablecoins will also involve large blockchain institutions, which together with TRON DAO will manage the collateral and ensure full convertibility.


Terra's UST reserves include a Bitcoin (BTC) denominated holding that is expected to grow to $10 billion. Currently, the reserves are about $1.63 billion worth of BTC. Terra also recently bought Avalanche (AVAX) for $100 million.

Sun's announcement piqued investor interest, with the price of native TRX surging more than 7% on Friday as the news broke.


The TRX/USD pair, which hit its all-time high of $0.23 on Jan 5, 2018, rose to an intraday high of $0.074. However, due to widespread weakness throughout the market, it has pared some of the gains and is currently around $0.067.

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