Created as an algorithmic stablecoin, similar to the fallen Terra network token, it is now changing its development direction to a hybrid model with increased transparency. We are talking about the recently announced USDD token belonging to the Tron network, initiated by Justin Sun.
Tron makes changes to its USDD stablecoin
According to data from Tron DAO, the organization responsible for maintaining the security of USDD, USDD is currently an oversized token with a protection factor of 226.1%.
The team behind USDD also promised a minimum security ratio of 130%, which they claim is higher than the same rate maintained by stablecoin MakerDAO DAI.
The USDD security currently includes 14,040.6 Bitcoin, 240 million USDT and approximately 1.9 billion Thrones (TRX), the native tokens of the Tron ecosystem. Security can be verified using signatures on block explorers.
– Congratulations to USDD for becoming the first over-secure decentralized stablecoin!. Collectively, assets worth $1.37 billion support $667 million in circulation – wrote on Twitter Justin Sun, creator of USDD.
🎉Congratulations to #USDD it becomes the first decentralized over-collateralized #StableCoin!
💵 The real-time guarantee rate is now over 200%! A total of $1.37 billion in assets backs the $667 million #USDD in circulation.
🔗 https://t.co/uyZ4nxZBMH https://t.co/T6qAzPlVLP
– HE Justin Sun 🅣🌞🇬🇩 (@justinsuntron) June 5, 2022
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USDD, which is a better TerraUSD with higher yield
Launched on May 5, USDD is very similar to UST, Terra’s algorithmic stablecoin powered by smart contracts.
Last month, the UST crashed, causing investors to lose around $60 billion in assets. Since then, algorithmic stablecoins have been heavily criticized, including USDD.
The rigid exchange rate of USDD against the dollar is regulated by smart contract arbitrage algorithms.
Investors can still trade $1 USDD for $1 TRX if the USDD price crosses the dollar threshold. By selling freshly mined TRX, users take advantage of arbitrage to keep the coin on the dollar and vice versa.
It’s the same algorithm that failed with UST. This is also the main reason why Tron DAO decided to change the way their stablecoin works.
– It was planned, but Terra/Luna definitely pushed and prioritized this effort – wrote on Twitter Justin Sun, creator of USDD.
“It’s been in the plan, but Terra/Luna have definitely ramped up and prioritized this for our team… We want to have #USDD be #oversizedwhich I think will make market players more comfortable using us in the future.” #SAFU💎💪https://t.co/3uarGjhefR
– HE Justin Sun 🅣🌞🇬🇩 (@justinsuntron) June 6, 2022
Now USDD has combined algorithms and traditional stablecoins to keep its peg to the dollar.
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