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TRON<\/a> founder Justin Sun touts an algorithmic stablecoin<\/a> reserve strategy to prevent TRON\u2019s new stablecoin USSD from crashing like LUNA<\/a>.<\/strong><\/p>\n Tron founder Justin Sun, famous for canceling a breakfast<\/a> with Warren Buffet<\/a>, talked up his new stablecoin<\/a>, USDD, as Terra<\/a> (UST) capitulated this week. <\/p>\n \u201cI still believe in algorithmic stablecoins,\u201d he said in a Zoom interview. \u201c I think the failure of LUNA was not because algorithmic stablecoins are not viable or are not doable\u2026We can\u2019t blame the algorithm just because LUNA failed.\u201d<\/p>\n Sun, who last month announced that Tron DAO<\/a>, the user-controlled organization that makes governance decisions about the network, would begin issuing a decentralized stablecoin backed by TRX<\/a>. <\/p>\n USDD, according to Sun, won\u2019t operate like traditional ones, such as Tether<\/a> (USDT) and Circle\u2019s USD Coin<\/a> (USDC) \u2013 but rather, as an algorithmic stablecoin such as TerraUSD (UST) and Frax Finance (FRAX). <\/p>\n \u201cWhen USDD\u2019s 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\u2019s price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD,\u201d Sun said.<\/p>\n Sun responded by saying that TRON designed USDD to have a smaller market cap than its native token, TRX, and to be smaller than the Tron DAO Reserve. <\/p>\n LUNA\u2019s pitfall, he said, was that they grew to a large market cap in a short space of time. USSD\u2019S market capitalization hovers around the quarter of a million-dollar mark, a far cry from the market caps of $77 billion and $51 billion of Tether (USDT) and USDC, respectively.<\/p>\n Sun said that the Tron DAO reserve would hold TRX and BTC to collateralize their decentralized stablecoin, together with $10B in USDT, USDC, BUSD, DAI<\/a>, and TUSD. According to the stablecoin\u2019s whitepaper, the stablecoin would maintain its peg by converting 1 USSD TO $1 worth of TRX or burning $1 of TRX to create one USSD.<\/p>\n TRON is offering 30% risk-free yields for staking USSD, a process where users \u201cstake\u201d \u00a0or lock up USDD for the opportunity to validate a transaction on the blockchain and simultaneously earn returns on the USSD, similar to an investment account at a bank that accrues interest over time. <\/p>\n Sun admits that this offer is a marketing ploy<\/a> to reward early adopters. \u201cIt\u2019s basically a marketing strategy, right? You get everybody involved to participate in the growth of the stablecoin,\u201d he said.<\/p>\n Sun has been a controversial figure over the years, with Sun fighting back against many claims<\/a> that have insinuated allegations of fraud and insider trading.<\/p>\n Launched in 2017, TRON eventually<\/p>\n He founded TRON back in 2017, introducing a TRX coin via an initial coin offering<\/a> (ICO<\/a>), which sold for $70 million, just before China banned ICOs. After hiring a former SEC compliance employee, David Labhart, he launched BitTorrent<\/a> Token (BTT) via an initial coin offering, which has since drawn criticism for mirroring Terra\u2019s LUNA.<\/p>\n What do you think about this subject?\u00a0Write to us and tell us<\/a>!<\/p>\n All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.<\/p>\n<\/p><\/div>\nIntroducing an algorithmic stablecoin<\/h2>\n
Sun\u2019s controversial backstory<\/h2>\n
Disclaimer<\/h3>\n