After TRON founder Justin Sun announced the new algorithmic stablecoin to run on the Tron Blockchain, the price of the related altcoin TRX rose by double digits.
Justin Sun announces new stablecoin, TRX price jumps in double digits
Unlike previous stablecoins like Tether (USDT) and Circle’s USD Coin (USDC), the new Justin Sun-backed stablecoin is the traditional As with stablecoins, bank accounts will not be backed by dollars (or other fiat currencies). Alternatively, USDD will function as an algorithmic stablecoin, similar to TerraUSD (UST) and Frax Finance (FRAX). In summary, it will use a mechanism similar to the others to keep it pegged to the US dollar. In the words of Sun:
When the price of USDD is less than one USD, users and arbitrageurs can transfer one USDD to the system and earn one USD worth of TRX in return. can send one dollar worth of TRX and receive one dollar worth of USDD.
TRX price reacted to this news with 15% rise. It was the most rising among the top 50 cryptocurrencies independent of the market.
$10 billion funding for new altcoin project
Tron DAO, the DAO division of Tron Blockchain, will be responsible for managing the stablecoin on the blockchain. According to Sun, Tron DAO will manage a reserve at 30% interest rate on its assets. Tron DAO will also offer USDD, with custody reserves of up to $10 billion in highly liquid assets, which will act as collateral for the cryptocurrency. This is comparable to Do Kwon, the founder and CEO of Terraform Labs, who plans to purchase $10 billion worth of Bitcoin to be used as a reserve for the US Treasury.
Although Sun does not specify which assets will be used as collateral, they are “Blockchain” He says there will be “highly liquid assets augmented by industry pioneers”. The assets will be used as a reserve to help peg the stablecoin to the US dollar. Today’s news comes after speculation that another blockchain network, Near Protocol, is planning to launch its own stablecoin with a project similar to UST in the near future. According to a modified version of this report, Terraform Labs CEO Do Kwon responded positively to the announcement of the Tron stablecoin.
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