Justin Sun to launch algorithmic stablecoin USDD on Tron, will use $10 billion of crypto as collateral

Quick Take

  • Tron is launching a decentralized algorithmic stablecoin called USDD.
  • Tron’s native coin TRX will be used to help the USDD stablecoin stay pegged to the dollar — along with $10 billion of crypto as collateral.

Tron will have its own native stablecoin called USDD from May 5, Tron founder Justin Sun announced on Thursday.

The stablecoin won't operate like traditional ones do, such as Tether (USDT) and Circle’s USD Coin (USDC), which keep dollars (and other assets) in bank accounts as backing. Instead USDD will be an algorithmic stablecoin like TerraUSD (UST) and Frax Finance (FRAX).

The stablecoin will have a similar system to these algorithmic stablecoins in order to keep its peg to the US dollar. As Sun explained, “When USDD's price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD's price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD.”

The Tron founder claimed that USDD’s algorithm will ensure the stablecoin maintains its US dollar peg regardless of market conditions.

Getting $10 billion of backing

A decentralized autonomous organization (DAO) called Tron DAO will manage the blockchain’s stablecoin. According to Sun, Tron DAO will administer a reserve with a 30% interest rate.

Tron DAO