The rise of major cryptocurrencies such as Bitcoin and Ethereum has given rise to centralized, collateralized stablecoins as the intermediary of transactions, with USDT and USDC as the representatives.
They play a prominent part in cutting transaction costs and boosting efficiency in an objective sense, but are at the same time plagued by a series of problems—from unlimited issuance, continuous deflation, and malicious activities to price swings, all flaws that come with their centralized nature.
As the crypto space continues to expand and the market’s need for decentralized systems swells, the launch of a decentralized algorithmic stablecoin is put high on the agenda. And this is when TRON enters the game. As the world’s first blockchain with close to 100 million users, and one that offers a perfect solution to the Penrose Triangle, TRON is poised for action.
On May 5, Justin Sun, Founder of TRON, announced on Twitter that the TRON DAO Reserve rolled out a decentralized stablecoin named USDD, which has so far been listed on Sunswap, Sun.io, Curve, Uniswap, Ellipsis, Pancakeswap, Kyberswap, etc., with an initial total supply of one hundred million. Through the cross-chain protocol BTTC, both of the circulating supply on Ethereum and BSC are near twenty million.
USDD is a decentralized algorithmic stablecoin launched collaboratively by the TRON DAO Reserve and top-tier mainstream blockchain institutions. The USDD protocol runs on the TRON network, is connected to Ethereum and BNBChain through the BTTC cross-chain protocol, and will be accessible across more blockchains in the future. USDD is pegged to the US Dollar (USD) through TRX and maintains its price stability to ensure users have access to a stable and decentralized digital dollar system that guarantees financial freedom. The website of USDD is now online (http://usdd.io). The contract address shall be subject to the announcement on the official website.
The contract addresses on TRON, Ethereum, and BSC are as follows:
https://tronscan.org/#/token20/TPYmHEhy5n8TCEfYGqW2rPxsghSfzghPDn
https://etherscan.io/token/0x0C10bF8FcB7Bf5412187A595ab97a3609160b5c6
https://bscscan.com/token/0xd17479997f34dd9156deef8f95a52d81d265be9c
Many renowned crypto projects have tried to issue algorithmic stablecoins, but none has succeeded. Though a newcomer to the space, TRON boasts irreplaceable advantages.
First, TRON delivers near-instant transactions. USDT on TRON has an independent decentralized settlement layer, cutting the time needed for a transfer from 30 minutes to less than a second, and the handling fee from 100 dollars to a mere few cents. Thanks to the robust network, the number of daily transactions on TRON has surged to 10 million, and the total value of transactions processed every day topped $10 billion. Since the launch of TRC20-USDT in 2019, TRON has processed upwards of $4 trillion of USDT transactions.
Bolstered by TRON’s ultra-high throughput, the four-year-old TRC20-USDT has grown into the world’s largest stablecoin network, with over $55 billion worth of on-chain stablecoins and financial assets as well as $4 trillion of USDT transactions processed. It has outperformed the USDT issued on all other blockchains by total supply, and its user base is poised to reach 100 million by the end of 2022. It is also worth highlighting that to stabilize USDD’s price and ensure the currency’s decentralization, TRON gathers a stream of top players in the crypto space to back the TRON DAO Reserve, the issuer of USDD. As the industry’s first reserve, the TRON DAO Reserve will have its team of experts and broad community users jointly decide on the supply and liquidity of USDD, affording the platform greater flexibility in response to emergencies and minimizing the price swings.
Finally and most importantly, TRON’s superiority lies in the core mechanism of TRON-based algorithmic stablecoins. Those familiar with algorithmic stablecoins will know the three key factors underpinning each algorithmic stablecoin, namely the scarcity (inflationary or deflationary), the arbitrage dynamic (bilateral arbitrage system), and the multi-currency model (price-stabilizing).
Correspondingly, TRON’s USDD also needs to address three core issues: 1. ensure data authenticity of the price feed system; 2. guarantee price stability and control the cost of deflation with scarcity management; 3. minimize short-term price fluctuations with a well-designed arbitrage mechanism. Here are the solutions TRON offers:
1. The USDD price oracle is provided by Super Representatives on the TRON network, who need to cast a vote for what they believe to be the current exchange rate of USD. The vote is tallied every N blocks, and the oracle will take the weighted medians as the actual rates;
2. A multi-currency method in connection with TRX is adopted to manage the long-term supply and demand of USDD. In the USDD protocol, TRON’s SRs absorb the volatility of the USDD price. When the USDD price falls below the target in the short term, users will burn their USDD to mint TRX, bringing the USDD price back to the target level;
3. The USDD protocol uses TRX as the base currency to price USDD, and it runs on the TRON network, of which TRX is the native token and the most natural defense against USDD price fluctuations. It also absorbs the short-term volatility of USDD.
In a nutshell, TRON ensures reliable price information of USDD with a decentralized price oracle mechanism, achieves USDD’s supply-and-demand balance with long-term scarcity management, and maintains its price stability by using TRX as the base currency to price USDD. As the world of algorithmic stablecoins is still virgin land, new challenges will expectedly come up down the road, and it is believed that TRON will evolve non-stop to provide better solutions to the blocks standing in the way.
As Justin Sun stated in his open letter, the potential of USDD is immense. He also added that TRON will continue to fuel the growth of USDD, focus on its application in various crypto segments, and eventually make it accessible to all traders across the globe.
We can even boldly picture that USDD will be favored by a growing number of users for digital asset trading and even take over part of the functionality of traditional e-payment giants including Paypal, Visa, and Swift. This will allow it to further reduce the financial losses and fractions arising from transfers and trades.
Decentralization is an irreversible global trend, and the arrival of the TRON DAO Reserve and USDD is most opportune. Let us stretch our imagination to the largest extent possible and think: what is the ultimate benefit that a decentralized reserve and a hard currency can bring to our society?
Eventually, humankind will surely achieve the freedom of finance, where value is extended, wealth is eternal, and assets flow freely. And digital technologies, advanced algorithms, the TRON ecosystem, and the innovation of the talented crypto entrepreneur will provide people with opportunities beyond their expectations to achieve this end goal.