If anyone asks: are there any algorithmic stablecoins still potential in the crypto market? The answer lies in the founder of Tron (TRX), Justin Sun.
In an interview via the Zoom app, Sun revealed that he still believes in the power of algorithmic stablecoins.
Perhaps that's why Sun continued the stablecoin project on Tron, USDD which launched on May 5 with the backing of the native coin, TRX.
Yes. This means USDD is a reflection of UST and Frax Finance (FRAX), as opposed to most stablecoins: Tether (USDT) and USD Coin (USDC).
How does USDD work?
The founders of Tron explain TRX plays an important role in maintaining the value of USDD which is based on the US dollar:
“If the USDD price drops below $1, the broker may send 1 USDD to the system and receive $1 worth of TRX. But if USDD exceeds $1, the investor may send any amount of TRX amounting to $1 to the decentralized system and receive 1 USDD.”
This means it also involves burning coins.
TronDAO has decided the market value of USDD is lower than TRX, and lower than TronDAO's profit amount.
It is understood that TronDAO owns TRX and Bitcoin (BTC), along with a number of other stablecoin assets: USDT, USDC, BUSD, DAI, and TUSD which are worth $10 billion as a reserve against USDD.
So far, Rizab TronDAO has a total of $82,341,872 worth of BTC, TRX ($181,643,872), USDT ($295,200,000), and USDC (over $2 billion).
Tron also offers a risk-free return of 30% if users stake USDD.
Touching on the Terra (LUNA) incident that would become Terra Classic and LUNA Classic (LUNC), Sun said that Terra (LUNA) failure was not due to the stablecoin algorithm flaw: "We can't blame the algorithm just because LUNA failed."
