How efficiently TRON DAO reserve will make USDD a successful hybrid stablecoin?

Dilution of Terra network’s UST stablecoin led to many investors losing billions but also made ways for other stablecoins to join the space

Amidst the uncertainty and skeptical situation created due to the fall of Terra network’s native crypto-assets LUNA and stablecoin UST, other stablecoins are seeking ways to fill the void. The collapse of the Terra network and dilution of its crypto assets created a huge hole in the portfolio of LUNA and UST stablecoin investors. Additionally, it also created an inevitable consequence in the form of a gap that was created following the diminishing of billion dollars worth of value from the crypto market. 

Recently on 5th June, TRON DAO announced their plan to increase their capital amount significantly that would be used to back up their own stablecoin. In case someone doesn’t know about it, On 5th May 2022, a stablecoin launched on the TRON blockchain, USDD. However, the USDD stablecoin is said to be the almost carbon copy of the fallen stablecoin of Terra network, UST. Yet there are a lot of dissimilarities between both USDD and UST stablecoins, along with some features that make USDD one of its kind.

According to the founder of TRON network, Justin Sun who said himself that initially USDD was designed to consistently maintain its peg value algorithmically to the US dollar. It’s quite similar to what almost all the stablecoin does, but TRON DAO wants to diversify backing that will overcollateralize USDD. 

Justin said that the reserve of collateralized amounts would be having cryptocurrencies along with other stablecoins has been collected. This reserve will be able to maintain about 130% of the total amount minimum for the issuance of USDD.

While in a news release TRON has described that the collateral ratio for stablecoin that is being promised is guaranteed and it also stated that it would start publishing updates regarding the collateral ratio from 5th June on the official website of TREON DAO Reserve. 

As per its definition, TRON DAO is a decentralized autonomous organization system that is organized in a decentralized manner itself. The decentralized reserve led by the TRON network itself belongs to the blockchain industry that takes the initial financial reserve asset’s custody that was raised from the TRON network itself and also other initiators across the blockchain space. 

USDD stablecoin is said to be decentralized enough where USDD protocol has its sole aim to provide the most stable, tamper-proof, decentralized, and stablecoin system free from freezing elements to the blockchain industry. This would act as a perpetual system that would be independent and free from any sort of centralized entity. 

Further, its most boasted characteristic is USDD being over collateralized where it has secured this feature through over-collateralization of numerous mainstream cryptocurrencies and digital assets including Bitcoin (BTC), TRON (TRX), USDT, etc. The overall value of the total collateralized assets amount is significantly more than the entire circulation of USDD stablecoin. 

Moreover, the collateral ratio for USDD is set at 130% which is the highest in the whole crypto space where another DAI has an over-collateralization of 120%, followed by USDT, TUSD, and USDC having a 100% collateralized ratio. 

USDD stablecoin is set to be circulated on the TRON network along with Ethereum and Binance Smart Chain and several others. USDD has achieved the ability through using the cross-chain protocol dubbed BitTorrent Chain. 

ALSO READ: Galaxy Digital CEO Mike Novogratz: Majority Of Hedge Funds Might Fail 

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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