Justin Sun’s Tron Nabs Big Names For Its $10 Bln Stablecoin Reserve

The Tron blockchain’s plans for a decentralized reserve appear to be gathering interest from several major players in the crypto industry.

Tron’s algorithmic stablecoin, USDD, began trading earlier this week. The blockchain’s planned decentralized reserve, which will be valued at $10 billion, is set to help maintain USDD’s 1:1 peg against the U.S. dollar.

Tron founder Justin Sun had last month outlined an ambitious, albeit vague plan to launch and maintain the stablecoin. Sun also said the stablecoin will offer a staggering 30% annual yield, much higher than any conventional token in the DeFi space.

A key aspect of Sun’s announcement was that Tron would collaborate with several major blockchain players in building the reserve. So far, the project has found three.

Alameda Research, Amber Group among backers for Tron reserve

Crypto trader Alameda, which was founded by FTX CEO Sam Bankman-Fried, became the first whitelisted institution of the Tron reserve. The move was announced by the Tron project on its official Twitter handle.

Singapore-based crypto unicorn Amber Group is the second whitelisted institution for the reserve, Tron said. Amber, which ranks sovereign fund Temasek among its investors, is reportedly looking to more than triple its value to $10 billion. The move would make it one of the most valuable crypto startups.

The third major backer for the USDD reserve is crypto exchange Poloniex. Tron is a major investor in the crypto exchange, which was bought and spun off by stablecoin operator Circle in 2019.

It was not immediately clear what sort of financial role the whitelisted firms would play in the upcoming reserve.

USDD criticized for copying Terra

But while Sun has outlined ambitious plans for USDD, the stablecoin was criticized for being extremely similar to Terra’s UST. Critics noted that the tokenomics behind the coin, ie burning and redeeming operated exactly like UST.

The fact that USDD will be backed by a large reserve, similar to UST, is also a point of contention.

But the similarities could also stem from the fact that most algorithmic stablecoins operate in an identical manner. Terra founder Do Kwon also welcomed the USDD launch.

The algorithmic stablecoin space is heating up this year. NEAR protocol recently launched its own offering, while IOST has similar plans.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn’t trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns.
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