As one of the largest DAO in the world, TRON, the network home to the most-used TRC20-USDT (over 12 million users), has recently announced a high-profile launch of the decentralized algorithmic stablecoin USDD.
This move marks a self-imposed revolution or correction for the crypto industry. As the most critical entry point to the industry and a bridge linking the virtual world and reality, stablecoins, in a centralized system, are not fit candidates to fulfill blockchain’s ultimate mission of decentralization.
Now, here comes the million-dollar question. What drives TRON, the stablecoin leader with the most robust user base, to venture into decentralized stablecoins? And what can we expect from the newly-issued USDD?
One can find some clues in Justin Sun’s two open letters to the community on April 21. Ahead of launching USDD, Justin Sun announced the establishment of the TRON DAO Reserve. By definition, this is a DAO system organized in a decentralized manner. Led by TRON, the decentralized reserve of the blockchain industry takes custody of the initial financial reserve assets raised from the TRON network and other initiators from the blockchain space.
This is a constructive idea. A decentralized reserve in the blockchain industry releases sufficient liquidity in the face of extreme market volatility to stabilize the market, mitigate panic, and effectively protect the interest of crypto users. This is an essential move and a key landmark, pushing the crypto market towards a more established phase as a more stable and reliable market will attract more new users.
More importantly, the TRON DAO Reserve, with its planned $10 billion reserve assets, will offer strong support for USDD, making USDD the first of its kind to be backed by such a powerful reserve. All algorithmic stablecoins focus on circumventing centralized policies, but USDD has a unique advantage because of the strong backing from the TRON DAO Reserve. It offers a strong incentive for users to choose USDD over other options when the stablecoin space becomes increasingly competitive as players continue to flood in.
Collateral-free algorithmic stablecoins such as ESD and BASIS have more or less been through extreme volatilities, and MIM has once even lost its peg. Therefore, how to boost users’ trust and confidence becomes a critical question that every new algorithmic stablecoin project must answer.
USDD is different. For one thing, the stability of USDD is backed by its peg to TRX, which absorbs short-term volatility; for another, the highly liquid billion-dollar reserve assets from the TRON DAO Reserve will swiftly stabilize the price of USDD against extreme industry-wide volatility.
Apart from the dual insurance mechanism that ensures stability, USDD also offers attractive incentives. Upon its launch, the TRON DAO Reserve has set the risk-free interest rate of USDD to as high as 30%, again showing the generosity of Justin Sun. In fact, looking back on TRC20-USDT’s journey to being the most popular stablecoin as a latecomer, one will easily find that it is everything related to its early incentive program that directly rewarded its holders. With a precedent as successful as TRC20-USDT, the supply and liquidity of USDD are promising.
However, what makes USDD so highly anticipated is not only the attributes that have prepared it for the market. With the help of the cross-chain protocol BitTorrent Chain (BTTC), USDD will circulate easily on BSC and Ethereum upon its issuance. This has given USDD a unique edge in chain-agnostic deployment. As BTTC grows, USDD will integrate with more major public chains, affording their users greater convenience and more efficient use of funds. This will power USDD to gain a strong foothold in stablecoins as more blockchains are entering the race to snatch a share.
Career-wise, Justin Sun pursues financial inclusion worldwide; personal growth-wise, he aspires to explore space. Like its creator, USDD is born to be revolutionary and ahead of time.
Now, TRON-USDT serves its role as a fast, affordable stablecoin of a large scale. However, centralized coins as leading actors are against what blockchain stands for and are adverse to its progress. Maybe we’ve been looking forward to the Stablecoin 3.0 era for so long that when TRON-USDD arises, everything seems to have fallen into place. After all, TRON has grown into the world’s largest DAO in the past years, with a transfer system so powerful that its peers can only look up to. That’s why TRON is proud to pioneer the decentralization of stablecoins!