Stablecoins have become growingly popular because of their resistance to crypto volatility. Several centralized institutions and MNCs are more friendly towards stablecoins than mainstream cryptocurrencies and aim to integrate them with their traditional financial services.
Considering this widespread adoption, the number of stablecoins in the market has increased tremendously. Currently, stablecoins represent 10% of the total crypto market capitalization. In this already crowded market, a new player has entered the town called USDD, which is backed by Tron’s native token, TRX.
USDD – Tron Network
Tron is a decentralized project and the world’s fastest-growing public chain that boasts over 88 million accounts and 3 billion transactions. The founder of Tron network, Justin Sun, recently announced that the project would launch a decentralized algo-stablecoin called USDD. This decision was outlined as an open letter to Tron DAO, and according to the reports, the launch will take place on May 5.
“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
USDD will be backed by TRX, the native token of Tron that gained 8.7% after the announcement. Moreover, the token will represent an evolution from the previous Tether stablecoin that utilizes Omni and Tron networks, including Ethereum.
It would be interesting to note how USDD will mark its position in the crowded and competitive stablecoin market where UST and Terra have already established a leadership position. However, USDD being an algo-stablecoin, already has an advantage. In algo-stablecoins, the supply and demand of the token are utilized to maintain the price stability of the token.
Moreover, Tron DAO will manage the supply of the stablecoin by administering a reserve with a 30% interest rate. These attributes make USDD a strong contender prior to the launch.