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The founder of the cryptocurrency project Tron spoke about the risks that influenced the collapse of the Terra project, and shared plans for the Tron USDD stablecoin.
In his publication, Justin Sun (Justin Sun) told details about the decentralized stablecoin USDD, secured by TRX and the US dollar. San has quite ambitious views on USDD – the businessman intends to make it a “new settlement currency”. To stimulate the introduction and increase the supply of USDD, this stablecoin is more than provided with stable and volatile assets, assures the founder of Tron. According to Sun, inorganic and unsustainable growth disrupts the work of any ecosystem, while transparent over-provision is crucial, preventing the stablecoin from untying from the US dollar.
The head of Tron explained that the Anchor lending protocol was involved in the collapse of the UST and LUNC rates. It attracted more than $14 billion worth of UST deposits, which was the main reason for the explosive growth of UST. However, it was this unsustainable growth that threw the Terra project off balance, which subsequently led to its collapse. In addition, the creation of the Luna Foundation Guard to diversify the provision of UST and prevent its untying from the US dollar was a belated decision. The reserve consisted of $3 billion worth of BTC, which was insufficient to secure a UST supply of nearly $19 billion.
Sun assured that the collateral for USDD will be transparently displayed on the reserve website of the project. The Tron DAO Reserve fund has already allocated $ 550 million for this and plans to increase reserves as the supply of USDD grows. In addition, the fund will establish liquid USDD trading pairs with DeFi and CeFi tokens in relation to USDD, which will be presented on centralized cryptocurrency exchanges and for which automated market makers (AMM) will be used. In conclusion, Sun added that now USDD operates on the Tron, BNB Chain and Ethereum blockchains, and in the future this list will expand.
According to Bloomberg, the market for algorithmic stablecoins is growing much faster than conventional stable cryptocurrencies, since it is better “protected from control” by regulatory authorities.
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