Tron’s USDD will be more like Terra’s UST, and targets $10 billion in reserves, founder Justin Sun said.

Tron will launch its decentralized algorithmic stablecoin called USDD (Decentralized USD) on May 5, 2022. Tron founder Justin Sun announced the development in an open letter.

The new stablecoin will also be available on Ethereum and the BNB Chain, with this possible via Tron’s BTTC cross-chain solution.

USDD as an algorithmic stablecoin is unlike the traditional stablecoin such as Tether (USDT) or USD Coin (USDC). As such, it’s not backed by cash or other financial assets, but by cryptocurrencies.

The USDD stablecoin will be pegged to TRX as the underlying asset and will feature the “mint-and-burn” mechanism similar to that used by Terra’s UST. The mechanism should see TRX burned to allow for the minting of USDD.

Terra CEO Do Kwon has commented on the ‘mint-and-burn’ functionality and Tron’s move to launch USDD as a signal of what’s ahead in terms of the future of decentralised economies. And it’s a scenario critics fail to understand, he added.

Decentralized economies deserve decentralized money – every blockchain will run on dect stables soon

 “As the most decentralized stablecoin in human history, USDD will make finance accessible to all by applying mathematics and algorithms. It will exist permanently without relying on any centralized entity,” TRON DAO tweeted.

$10 billion worth of reserves

Support for USDD falls initially on TRON DAO Reserve, a decentralised autonomous organisation that is set to handle custody service of a massive $10 billion worth of reserve. The reserve, according to Sun, will comprise “highly liquid assets raised from initiators of the blockchain industry.

The stablecoin’s early management will also involve major blockchain institutions, which together with TRON DAO, will manage the collateral and ensure full convertibility.

Terra’s UST reserves include a Bitcoin (BTC)-denominated holding set to grow to $10 billion. Currently, the reserves amount to about $1.63 billion worth of BTC. Terra also recently bought $100 million worth of Avalanche (AVAX).

TRX price

Sun’s announcement stirred interest among investors, with the price of the native TRX jumping more than 7% on Friday as the news hit the market.

The TRX/USD pair, which hit its all-time high of $0.23 on 5 January 2018, rose to an intraday high of $0.074. However, with widespread weakness across the market, it has since pared some of the gains to currently trade around $0.067.

The post Tron to launch a decentralized algorithmic stablecoin called USDD appeared first on Coin Journal.

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