New stable coin USDD to launch on Tron Network

Justin Sun has announced he will use $10 billion in cryptocurrency as collateral to launch a new algorithmic stable coin called USDD on the TRON blockchain network.

The announcement comes off the back of the recent boom in decentralised stable coins DAI & Terra’s UST. Terra’s UST is now the third-largest stablecoin, commanding a $17.89 billion market capitalization.

In fact the USDD protocol operates in a very similar way to Terra. As explained by Sun on Thursday, it will not rely on any centralised institutions for redemption, management, or storage. Instead, it will operate as a fully decentralised stable coin pegged to Tron’s native token TRX. 

“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.” said Sun in his blog.

The reserve “raised from initiators of the blockchain industry,” to keep the stability of USDD, it will offer a risk-free interest rate of 30% per annum and will also provide custody service for $10 billion in highly liquid assets. Whilst cryptocurrency assets are not directly mentioned, the plan seems to echo that of Terra’s, who are looking to purchase $10 billion worth of Bitcoin as a reserve for UST.

Due to launch on May 5, the decentralised stable coin will be available on Ethereum and the BNB chain via the BTTC cross-chain protocol.