Justin Sun presented a stablecoin, TRX soared by 16%

The success of the algorithmic stablecoin UST of the Terra project, which soared to the TOP-3 stablecoins, is rivetingTo yourselfmore and more attention. So Justin Sun could not stand aside, announcing yesterday the release of USDD. The launch of the coin will take place on May 05.

Image Source: twitter.com/justinsuntron

In centralized stablecoins (for example, USDTfrom Tether) liquidity is supported by reserves. So, ideally, each USDT should be backed by $1 in the company's bank account. In fact, less than 5% of fiat directly accumulates in Tether reserves, which was disclosed during a mandatory audit. The company has direct access to the issue of coins and can issue a loan in USDT against debt obligations of other persons. This will undermine confidence in stablecoins, since in the event of a crisis in the market, the stablecoin’s link to fiat will be broken.

 

Image Source: tether.to

Algorithmic stablecoins go the other way – theyassociated with other cryptocurrencies. This model has its drawbacks, but the developers are not able to print more coins. Thus, the emission of UST is linked to the internal coin LUNA, and soon a link to Bitcoin purchased under the reserve will be added.

Justin Sun went the same way.Being the developer of the Tron project, he pegs USDD to the TRX coin. If USDD drops below $1, arbitrageurs and users can send USDD into the system and receive $1 worth of TRX. If USDD becomes more expensive than $1, participants send $1 worth of TRX into the system and receive USDD.

On this news, TRX soared by 16% in a day, but lost half of its growth in recent hours.

Image Source: Cryptocurrency ExchangeStormGain

Tron is ranked 22nd with a capitalization of $7 billion, and the number of network addresses exceeds 88 million. Due to low fees, the turnover of TRC-20 USDT exceeded ERC-20 USDT, reaching $41 billion.

Successful USDD launch will draw attention to a newstablecoin, which will positively affect the prospects for TRX. However, Justin Sun himself is a controversial figure. He was often accused of plagiarism, cheating users and financial fraud. You can read about the results of the journalistic investigation in the articles of The Verge. No official charges have been brought forward.

 

Analytical group StormGain

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