- Justin Sun talks about lessons learned and plans for Tron’s decentralized stablecoin USDD.
- Sun came up with solutions to help drive utilitarian adoption and is planning to take a more sustainable approach to grow the USDD supply.
- TRON founder aims for USDD to be the new settlement currency of crypto.
On May 31, TRON Founder Justin Sun published a blog post detailing the lessons he learned from the Terra (LUNA) crash. These lessons, according to Sun, will be considered when implementing TRON’s new decentralized stablecoin USDD. The blog post ends with a rough roadmap of USDD’s journey to be crypto’s new settlement currency.
Built on the back of #TRON’s thriving stablecoin ecosystem, #USDD will be over-#collateralized by a combination of stable and volatile assets #decentralized #stablecoin (#CDS).
We want $USDD to be the new settlement currency of #crypto.https://t.co/2Au2opIMhR
— H.E. Justin Sun 🅣
(@justinsuntron) June 1, 2022
In his blog, Justin mentioned that “Inorganic and unsustainable growth is bad” and “Transparent over-collateralization is critical to preventing depegging” were the lessons he learned after the Terra crash.
Sun pointed out that Anchor, a lending protocol, was responsible for the unsustainable growth that led to Terra’s downfall. The protocol, at its peak, attracted over $14b in UST deposits — the main reason for UST’s explosive growth. However, it was that unsustainable growth that threw Terra off-balance causing it to crash.
Furthermore, the attempt of Terra to establish the Luna Foundation Guard to diversify UST’s collateral and prevent depegging was already too late. The reserve consisted of just $3 billion worth of BTC, hardly enough to secure the nearly $19 billion UST supply.
With such events, Sun came up with solutions to help drive utilitarian adoption and is planning to take a more sustainable approach to grow the USDD supply.
In Sun’s plans, The TRON DAO Reserve will develop a utility for USDD across crypto markets to help drive its adoption. USDD trading pairs aim to have more liquidity than USDT or USDC on both centralized and decentralized exchanges.
They also plan to transparently display all collateral on its reserve website soon. TRON DAO already allocated $550 million of assets to the reserve and plan to continue as the USDD supply grows.
Additionally, TRON DAO Reserve will designate more liquid trading pairs in DeFi and CeFi against USDD. Ensuring all heavily traded on-chain assets have high USDD-denominated liquidity on AMMs for DeFi, while partnering with several centralized exchanges such as Huobi, KuCoin, Poloniex, and Bybit for CeFi.
We want USDD to be the new settlement currency of crypto. To enable this, we will focus on liquidity, while making sure USDD has ample reserves.
USDD is also planning to expand to support multiple chains as the industry moves closer to a cross-chain future. Currently, they are active on TRON, BNB Chain, and Ethereum.