The founder of the Tron cryptocurrency project spoke about the risks that influenced the collapse of the Terra project and shared his plans for the Tron USDD stablecoin.
In his publications Justin Sun shared the details of the USDD decentralized stablecoin backed by TRX and the US dollar. Sun has rather ambitious plans for USDD – the businessman intends to make it the “new settlement currency”. To stimulate adoption and increase the supply of USDD, this stablecoin is more than backed by stable and volatile assets, the founder of Tron assures. According to Sun, inorganic and unsustainable growth disrupts any ecosystem, while transparent overcollateralization is critical in preventing a stablecoin from decoupling from the US dollar.
The head of Tron explained that the Anchor lending protocol was involved in the collapse of the UST and LUNC rates. It attracted more than $14 billion in UST deposits, which was the main reason for the explosive growth of UST. However, it was this unsustainable growth that brought the Terra project out of balance, which subsequently led to the collapse. In addition, the creation of the Luna Foundation Guard to diversify UST collateral and prevent it from decoupling from the US dollar was an overdue decision. The reserve consisted of $3 billion worth of BTC, which was not enough to secure an almost $19 billion UST offer.
Sun assured that the USDD collateral would be transparently displayed on the project’s backup site. The Tron DAO Reserve Fund has already allocated $550 million for this and plans to increase the reserves as the USDD supply grows. In addition, the fund will establish liquid USDD trading pairs with DeFi and CeFi tokens against USDD, which will be listed on centralized cryptocurrency exchanges and which will use automated market makers (AMMs). Sun concluded by adding that USDD currently operates on the Tron, BNB Chain, and Ethereum blockchains, and this list will expand in the future.
According to Bloomberg, the algorithmic stablecoin market is growing much faster than conventional stablecoins because it is better “protected from scrutiny” by regulators.
Source: Bits
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