Tron to Launch an Algorithmic Stablecoin Backed by $10 Billion in Crypto
Categories: Crypto News AUSTRALIA
Unlike traditional stablecoins such as Tether (USDT), which already runs on Tron, USDD will supposedly be “fully decentralised” – it won’t be backed by centralised assets held in traditional financial institutions such as banks, but will depend on algorithms to keep its peg to the US dollar.
Tron’s ‘Self-Imposed Revolution’
Sun characterised the plan as a “self-imposed revolution”, going on to describe USDD as “a fully decentralised stablecoin underpinned by mathematics and algorithms, bringing the development of stablecoins to the next level”.
Tron DAO to Establish US$10 Billion Reserve, Offer 30% Interest Rate
In a related announcement, Sun explained that Tron DAO, the decentralised autonomous organisation created to manage USDD, will establish the Tron DAO Reserve, which aims to raise US$10 billion from unnamed “prominent blockchain industry players”.
This plan closely mirrors a recent announcement from Terra founder Do Kwon, who outlined his intention to acquire US$10 billion in BTC to act as a reserve for Terra’s algorithmic stablecoin, UST. Sun added that Tron DAO Reserve would offer a “basic risk-free” interest rate of 30 percent, which surprised some Twitter users who considered it unrealistically high and unsustainable.
Announcement Sparks Gains and Scepticism
TRON’s native token TRX gained about 18 percent following the announcement, hitting a high of US$0.074. TRX has since lost about half those gains and sits at US$0.067 at the time of writing. While the announcement sparked investor interest, not everyone was convinced.
Several Twitter users pointed out that the Tron blockchain itself isn’t exactly leading the way on decentralisation. Others pointed out that the plan resembled a poor man’s version of Terra’s UST being run by a guy with a less than stellar reputation. Terra’s UST is the most popular algorithmic stablecoin in current circulation: UST flipped Binance USD to become the third-largest stablecoin by market cap earlier this week.