TRON Founder Justin Sun says that the launch of Tron’s new stablecoin, Decentralized USD ($USDD), combines the best aspects of competing stablecoins on the market.
In an open letter published on 21 April 2022, Sun said that TRON DAO had “joined hands with major blockchain players to launch USDD (Decentralized USD), the most decentralized stablecoin in human history, making finance accessible to all by applying mathematics and algorithms.”
He then went on to explain how $USDD maintains its peg the dollar:
“In the Stablecoin 3.0 era, USDD will not rely on any centralized institutions for redemption, management, and storage. Instead, it will achieve full on-chain decentralization. USDD will be pegged to the underlying asset, TRX, and issued in a decentralized manner. 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. Regardless of market volatility, the USDD protocol will keep USDD stable at 1: 1 against the US dollar via proper algorithms in a decentralized manner.“
He also mentioned that $USDD on TRON is “scheduled to be issued and enter circulation on May 5, 2022.” Furthermore, it will also be “available on Ethereum and BNB Chain through the BTTC cross-chain protocol.”
As The Daily Hodl reported on August 22, during an interview with CoinGecko, Sun explained why he believes that $USDD is better than its competitors:
“I will say I think USDD is a hybrid model of DAI, UST, and other stablecoins. So basically we studied all the algorithms in the decentralized stablecoin markets. And then we basically took advantage of all the stablecoins here and made the better choices for the traders in the market.
“I think first of all, the disadvantage of Ethereum and the Bitcoin blockchain is Ethereum and the Bitcoin blockchain, they don’t have native stablecoins, so I think for Bitcoin, because it’s not a smart contract platform, but Ethereum… Even though we have DAI, basically I think DAI is a decentralized stablecoin on Ethereum.
“But be aware, DAI is not blockchain-based, DAI is developed on Maker. Even though you use ETH as collateral and to mint DAI, the governance structure is not using ETH as the governance structure. It’s using MKR for the structure, which also means Maker is just creating smart contracts on Ethereum. So it’s not an Ethereum blockchain-based stablecoin.
“So I think because stablecoins are way too important, it’s basically the foundation of the industry, and that’s why first of all we need to have a blockchain-based stablecoin. LUNA is a blockchain based stablecoin. So LUNA is the token for the blockchain and you can use LUNA to mint UST. But the problem for LUNA and the UST is that they only have one correlation. So basically all the UST is 100% based on LUNA, which I think caused this kind of bad death spiral…”“