Tron founder Justin Sun has announced plans to launch a decentralized algorithmic stablecoin called USDD on the TRON blockchain network.
In an open letter on Thursday (April 21, 2022), Sun revealed that USDD will be “a fully decentralized stablecoin underpinned by mathematics and algorithms.”
According to the Tron founder, USDD will not rely on any centralized entity for storage, redemption, or management but will be instead issued in a decentralized manner and will be pegged to Tron’s native token TRX. An excerpt from the letter said:
“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 added that the stablecoin’s algorithm will maintain its stability against the US dollar despite market volatility.
Furthermore, the open letter noted that the TRON DAO reserve will offer a risk-free interest rate of 30% per annum and will also provide custody service for $10 billion in highly liquid assets.
The fund, which will be “raised from initiators of the blockchain industry,” will act as a reserve to keep the stability of USDD.
While the cryptocurrency assets are not mentioned, the plan seems similar to Do Kwon’s, co-founder and CEO of Terraform Labs, who is looking to purchase $10 billion worth of bitcoin as a reserve for UST.
Meanwhile, Sun announced that the TRON-based USDD is expected to be issued and circulated beginning on May 5, 2022. The decentralized stablecoin will be available on Ethereum and the BNB chain via the BTTC cross-chain protocol.