TRON DeFi Surges on Terra-Inspired Stablecoin Launch - Aliens: AI Crypto News & Markets Updates
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TRON DeFi Surges on Terra-Inspired Stablecoin Launch

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Crypto Briefing

Tue, May 24, 2022

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TRON's USDD employs a similar stabilization mechanism as Terra's UST stablecoin, which suffered a $40 billion death spiral earlier this month.

Less than a month after launching USDD, an algorithmic stablecoin that uses a similar mechanism to Terra’s collapsed UST, TRON has become the third-largest blockchain by total value locked in its DeFi protocols.

Despite the relatively shaky market conditions permeating the DeFi sector following Terra’s collapse earlier this month, TRON’s ecosystem of decentralized applications is thriving, at least in terms of total value locked.

The most likely reason TRON’s ecosystem has surged is the rapid growth of its recently launched stablecoin, USDD, which has promised investors a “risk-free” 30% interest rate.

According to its whitepaper , USDD is designed to be a “cryptocurrency issued by the TRON DAO Reserve with a stable price” with a “built-in incentive mechanism and a responsive monetary policy.” This mechanism allegedly allows the asset “to self-stabilize against any price fluctuations,” similar to how Terra’s LUNA token and Bitcoin reserves were meant to stabilize UST before it imploded.

Similar to Terraform Labs’ plan to raise $10 billion in Bitcoin to protect UST’s peg amid extraordinary market volatility, the TRON Foundation has created the TRON DAO Reserve with the same goal: to raise $10 billion in capital to protect USDD’s peg.

#USDD #TRONDAOReserve pic.twitter.com/HrYeGmwWp0 — H.E. Justin Sun 🅣🌞🇬🇩 (@justinsuntron) April 21, 2022 To incentivize users to mint and stake the stablecoin across various DeFi applications on TRON, the network’s controversial founder Justin Sun has promised a 30% “risk-free” interest rate on USDD.

Most of the USDD supply is locked in various DeFi protocols on the TRON network.

While the USDD launch has helped TRON over the past few weeks, it’s worth noting that the TRON DAO Reserve, USDD’s official “custodian,” has failed to highlight any of the risks associated with its new algorithmic stablecoin anywhere in its official documents or public communications.

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