Decentralized network Tron has become the latest to join the stablecoin fanfare. The network’s creator, Justin Sun, has announced plans to create and issue a new algorithmic stablecoin USDD.
The announcement, unsurprisingly, pushed the network’s native token TRX price upwards of 20%. At press time, the currency was trading at $0.068 with a 24-hour price change of 2.28%.
In a blog post issued Thursday, Justin Sun revealed plans to issue a fully decentralized algorithmic stablecoin called USDD. The UST-like currency will maintain the value of the US Dollar with the help of TRX, regardless of the market conditions.
“When USDD’s price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD’s price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD,” the company’s press release read.
To help with the process, Tron DAO will also set up and manage a reserve worth $10 billion with a 30% interest rate from “prominent blockchain industry players.” While the Tron foundation has not revealed the collateral assets, Sun said the reserve will hold “highly liquid assets” to back the stablecoins.
— H.E. Justin Sun 🅣🌞🇬🇩 (@justinsuntron) April 21, 2022
USDD will also be available on Ethereum and BNB Chain in addition to Tron, using the BTTC cross-chain protocol. According to the release, a well-known institution in the blockchain industry is preparing to accept the USDD stablecoin.
Tron’s latest stablecoin project is strikingly similar to Terra’s UST reserve initiative, wherein the network will accumulate $10 worth of Bitcoin and crypto reserve to back its algorithmic stablecoin UST. So far, the Luna Foundation Guard has acquired $1.7 billion in Bitcoin, $549.84 million in USD-denominated stablecoins, and $14.74 million in Terra.