Key facts:
The first stage of USDD will start on May 5, when the first coins are issued
The similarities with Terra and its stablecoin UST are so many that there are those who consider it “a clone”
Justin Sun, creator of the Tron network, announced hours ago that he will launch a stablecoin whose collateral will be the network’s native currency, TRX. Although he did not mention it, the proposed system bears a strong similarity to the Terra network and its LUNA and UST coins.
“Tron DAO Joins Leading Blockchain Players To Launch USDD (Decentralized USD)”, Sun expressed. It defines this future currency as “the most decentralized stablecoin in human history, which will make finance accessible to all through the application of mathematics and algorithms.” According to this businessman, the currency “will have a perpetual existence without depending on any centralized entity”.
Sun details that there will be algorithmic means that will make USDD maintain parity with the US dollar, without the need to have fiat money as collateral. “When the price of USDD is lower than 1 USD, users and arbitrators can send 1 USDD to the system and receive 1 USD in TRX; and when the price of USDD is higher than 1 USD, users and arbitrators can send 1 USD TRX to the system and receive 1 USDD”, says Sun.
Regardless of market volatility, the USDD protocol will keep USDD stable at 1:1 against the US dollar through proper algorithms in a decentralized manner.
Justin Sun, creator of Tron
Besides, those who deposit USDD in a certain smart contract, will be able to receive – according to Sun’s explanation – 30% annual “risk-free” interest. To achieve this, the Tron DAO Reserve will be established.
4 “space” stages for the Tron stablecoin
The coin will go through several stages until it reaches its final version, as detailed the white book (white paper) of USD.
The first stage, called “Space”, begins next May 5. It will include the first issuances of USDD, by institutions included in a white list, that is, they will be selected by Tron DAO. In addition, the creation of the aforementioned Tron DAO Reserve is contemplated and its initial task is mentioned:
The Tron DAO Reserve will raise $10 billion in initial reserves from prominent blockchain industry players, who will make deposits over a period ranging from 6 to 12 months. At the same time it will continue to attract more liquid assets and whitelist more compatible institutions as stakeholders to better perform its decentralized role.
USDD white paper.
The second stage is the “ISS” (International Space Station). It is expected to start on October 10, 2022 with the launch of the USDD testnet.
The third stage is «Moon» (moon). It is expected on November 30 of this year and on it, the USDD network will be officially launched.
Lastly, the fourth stage is «Mars» (mars) and will go live on December 30, 2022. At this stage, USDD would already be fully operational and available to any user on the mainnet.
USDD is “a clone of Terra”
Everything mentioned by Sun as a novelty (and that it is for the Tron ecosystem) bears a striking resemblance to the functioning of the stablecoin UST, from the Terra network. It is a currency collateralized by the terra token (LUNA), which has an algorithmic mechanism to maintain parity with the US dollar.
Furthermore, the main attraction of Terra is the Anchor Protocol platform, which pays 20% annual interest to those who deposit UST in its smart contract. That money, as CriptoNoticias has detailed, is extracted from Anchor reserves.
The similarities with Terra did not go unnoticed among cryptocurrency industry insiders. For example, Mariano di Pietrantonio, founder of MakerGrowth, qualified USDD as a “Terra clone.”
For him, the interesting thing is that the largest liquidity of the main stablecoin, Tether (USDT), is on the Tron network. Di Pietrantonio wonders what effects the introduction of USDD will have on stablecoin exchange fees; on the potential passage of liquidity from USDT to USDD; and on the price of TRX.
With regard to the latter, the news already affected the price of cryptocurrency. At the time of publication of this article, each TRX trading at USD 0.07. this represents an increase of 16% in the last 24 hours.
Still, TRX is far from its all-time high reached in 2018, when the coin traded for $0.3 (at four times its current price).