Tron Now Third-Largest DeFi Blockchain After $USDD Algorithmic Stablecoin Launch

Statistics for the Tron blockchain quickly saw a sharp rise following the public release of $USDD, the project’s new algorithmic stablecoin. The Tron blockchain now ranks as the third-largest blockchain in terms of total value locked (TVL).

This ranking follows two other popular chains: Binance’s BNB Chain, and Ethereum. BNB Chain has roughly $8.8 billion in TVL at a 7.95% share, while Ethereum has $71.22 billion at a 64.27% dominance by TVL. The month-to-date change for Tron reflects +41.68%, with a +13.30% change over the past week.

While the entire crypto space is currently on a bear cycle, these bullish indicators from Tron have primarily been a result of the launch of $USDD (token name: Decentralized USD), its new algorithmic stablecoin which promises 20% APY. From Ethereum, Polygon, Solana, Avalanche, BNB Chain, and Fantom, most of the DeFi and Web3 space has been on a recent downturn for at least the past month, with the bear market signaling a longer duration for this particular cycle.

Such double-digit returns can be a point of caution, though, as it expresses similar design and intent to Terra, a failed algorithmic stablecoin project which recently imploded to near-zero values.

To be clear, Tron’s USDD is not backed by anything: not fiat, not the U.S. dollar. Instead, as an algorithmic stablecoin, it is governed by smart contracts. In particular, this algorithm proceeds from an arbitrage between USDD and TRX, which the Tron network’s native token.

Data from Tron’s block explorers indicate that roughly half of the capital for its TVL is flowing from its DeFi lending and borrowing protocol, JustLend (JST). JustLend has also publicly disclosed that an annual percentage yield of 23% can be achieved if USDD is locked on their protocol.

At the time of writing, USDD’s market capitalization has risen to over $602 million, climbing roughly 120% over the past 14 days.

As the Tron network continues to develop its DeFi ecosystem, these overall TVL rankings could shift in time. It’s likely that Ethereum will continue to hold the lead for some time, given the popularity and scale of its decentralized finance protocols. However, with Tron’s rapid development, it’s possible that it could challenge and eventually chip off Ethereum’s dominance in this crypto sector.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.