Justin Sun, founder of Tron, announced plans to launch USDD, a decentralized algorithmic stablecoin on the TRON blockchain network.
- Sun disclosed in an open letter Thursday, April 21, 2022 that USDD will be. “a fully decentralized stablecoin underpinned by mathematics and algorithms.”
- According to the Tron founder, USDD will not rely on any centralized entity for storage, redemption, or management but will be instead issued in a decentralized manner and will be pegged to Tron’s native token TRX. Here is a portion of the letter:
“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.”
- Sun added that the stablecoin’s algorithm will maintain its stability against the US dollar despite market volatility.
- The open letter also noted that the TRONDAO reserve will offer a risk free interest rate of 30% per year and will also provide custody services for $10 billion worth highly liquid assets.
- The fund, which will be “raised from initiators of the blockchain industry,” will act as a reserve to keep the stability of USDD.
- While the cryptocurrency assets are not mentioned, the plan seems similar to Do Kwon’s, co-founder and CEO of Terraform Labs, who is looking to purchase $10 billion worth of bitcoin as a reserve for UST.
- Sun has announced that the TRON based USDD will be issued by Sun and will begin circulation on May 5, 2022. Through the BTTC cross chain protocol, the decentralized stablecoin is available on Ethereum as well as the BNB blockchain.