{"id":4438,"date":"2022-05-26T06:47:17","date_gmt":"2022-05-26T06:47:17","guid":{"rendered":"http:\/\/cryptoheretostay.com\/?p=4438"},"modified":"2022-05-26T06:47:17","modified_gmt":"2022-05-26T06:47:17","slug":"tron-defi-surges-on-terra-inspired-stablecoin-launch","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=4438","title":{"rendered":"TRON DeFi Surges on Terra-Inspired Stablecoin Launch"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<\/p>\n<h3>Key Takeaways<\/h3>\n<p>TRON&#8217;s DeFi ecosystem is soaring. It&#8217;s now the third-largest blockchain in total value locked terms, trailing only Ethereum and BNB Chain.<br \/>\nThe surge can likely be attributed to its new algorithmic stablecoin USDD, which has ballooned to $545 million on promises of 30% &#8220;risk-free&#8221; yields.<br \/>\nTRON&#8217;s USDD employs a similar stabilization mechanism as Terra&#8217;s UST stablecoin, which suffered a $40 billion death spiral earlier this month.<\/p>\n<p>Share this article<\/p>\n<p>Less than a month after launching USDD, an algorithmic stablecoin that uses a similar mechanism to Terra\u2019s collapsed UST, TRON has become the third-largest blockchain by total value locked in its DeFi protocols.<\/p>\n<h2>TRON Becomes Third-Largest DeFi Ecosystem<\/h2>\n<p>TRON\u2019s DeFi ecosystem is benefiting from its new high-yield stablecoin.\u00a0<\/p>\n<p>Despite the relatively shaky market conditions permeating the DeFi sector following Terra\u2019s collapse earlier this month, TRON\u2019s ecosystem of decentralized applications is thriving, at least in terms of total value locked.<\/p>\n<p>Per data from Defi Llama, TRON\u2019s DeFi ecosystem has grown by roughly 26% over the past month, rising from around $4 billion to $5.38 billion today. It\u2019s surpassed other popular Layer 1 networks like Avalanche and Solana to become the third-largest blockchain in total value locked, trailing only Ethereum and BNB Chain. For comparison, the aggregate DeFi sector lost around $90 billion in liquidity over the past month alone, with most leading blockchains seeing their locked value plummet between 30 and 70% following Terra\u2019s collapse.\u00a0<\/p>\n<p>The most likely reason TRON\u2019s ecosystem has surged is the rapid growth of its recently launched stablecoin, USDD, which\u00a0has promised investors a \u201crisk-free\u201d 30% interest rate. According to its whitepaper, USDD is designed to be a \u201ccryptocurrency issued by the TRON DAO Reserve with a stable price\u201d with a \u201cbuilt-in incentive mechanism and a responsive monetary policy.\u201d This mechanism allegedly allows the asset \u201cto self-stabilize against any price fluctuations,\u201d similar to how Terra\u2019s LUNA token and Bitcoin reserves were meant to stabilize UST before it imploded.\u00a0\u00a0<\/p>\n<p>The whitepaper shows a striking likeness between USDD and Terra\u2019s UST. When USDD trades below $1, arbitrageurs can burn it for $1 worth of TRON\u2019s native cryptocurrency, TRX. Conversely, when USDD trades above $1, arbitrageurs can swap $1 worth of TRX for one USDD, minting more USDD in the process and increasing its supply. Theoretically, this mechanism helps ensure that its price will return to its desired $1 peg.\u00a0<\/p>\n<p>Similar to Terraform Labs\u2019 plan to raise $10 billion in Bitcoin to protect UST\u2019s peg amid extraordinary market volatility, the TRON Foundation has created the TRON DAO Reserve with the same goal: to raise $10 billion in capital to protect USDD\u2019s peg.<\/p>\n<p lang=\"en\" dir=\"ltr\">\ud83d\udcb8The @usddnetwork will provide custody service for the $10B worth of highly liquid assets raised from blockchain industry initiators and use them as an early-stage reserve.<\/p>\n<p>\u2696\ufe0fThe @trondaoreserve will set its basic risk-free interest rate to 30% per annum.#USDD #TRONDAOReserve pic.twitter.com\/HrYeGmwWp0<\/p>\n<p>\u2014 H.E. Justin Sun \ud83c\udd63\ud83c\udf1e\ud83c\uddec\ud83c\udde9 (@justinsuntron) April 21, 2022<\/p>\n<p>To incentivize users to mint and stake the stablecoin across various DeFi applications on TRON, the network\u2019s controversial founder Justin Sun has promised a 30% \u201crisk-free\u201d interest rate on USDD. While it remains unclear where this yield comes from, the recent surge in TRON\u2019s DeFi ecosystem suggests that the incentive mechanism is working. Since USDD launched on May 2, it has grown exponentially, reaching a market capitalization of around $545 million. Most of the USDD supply is locked in various DeFi protocols on the TRON network. with most of it finding its way into various DeFi protocols on the Tron network.<\/p>\n<p>While the USDD launch has helped TRON over the past few weeks, it\u2019s worth noting that the TRON DAO Reserve, USDD\u2019s official \u201ccustodian,\u201d has failed to highlight any of the risks associated with its new algorithmic stablecoin anywhere in its official documents or public communications. After all, USDD functions much like Terra\u2019s UST, which met its end in a $40 billion death spiral event. In Terra\u2019s collapse, when UST began to lose its peg to the dollar, it surpassed LUNA\u2019s market cap, signaling that the death spiral was in motion. If USDD keeps growing at this pace, it could soon surpass TRX\u2019s $7.74 billion market capitalization. As TRX is supposed to back USDD, that could mean the stablecoin ends up suffering the same fate as UST\u2014potentially causing another industry-wide wipeout.\u00a0<\/p>\n<p><i>Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.<\/i><\/p>\n<p>Share this article<\/p>\n<p>The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.<\/p>\n<p>You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.<\/p>\n<p>See full terms and conditions.<\/p>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cryptobriefing.com\/tron-defi-surges-on-terra-inspired-stablecoin-launch\/?utm_source=category_feed&#038;utm_medium=rss\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways TRON&#8217;s DeFi ecosystem is soaring. It&#8217;s now the third-largest blockchain in total value locked terms, trailing only Ethereum and BNB Chain. The surge can likely be attributed to its new algorithmic stablecoin USDD, which has ballooned to $545 million on promises of 30% &#8220;risk-free&#8221; yields. TRON&#8217;s USDD employs a similar stabilization mechanism as [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4439,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[4],"tags":[],"class_list":["post-4438","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/4438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4438"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/4438\/revisions"}],"predecessor-version":[{"id":4440,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/4438\/revisions\/4440"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/4439"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}