UST Falls, TRON (TRX) Founder Justin Sun Still Believes Algorithmic Stablecoin For USDD

Founder of Tron (TRX) and USDD Justing Sun. (Screenshot of @justinsuntron Twitter)

JAKARTA – After successfully launching the USDD (Decentralized USD) stable coin, Justin Sun as the founder of TRON (TRX) still believes in algorithmic stablecoins. The statement came after Terra's stablecoin UST collapsed. For information, UST is supported by the Bitcoin and LUNA algorithms.

“I still believe in algorithmic stablecoins,” said Justin Sun.

Furthermore, Sun stated that LUNA's failure was not due to the UST algorithmic stablecoin being inoperable. On the other hand, he insists he still believes in such stablecoins.

"We can't blame the algorithm just because LUNA failed," he added.

Last month, Sun announced that Tron DAO, the decentralized autonomous organization that makes governance decisions regarding the network, will begin issuing decentralized stablecoins powered by TRX.

Justin Sun considers that USDD does not operate in the traditional way like Tether (USDT) and Circle (USDC). Sun declares USDD to be an algorithmic stablecoin just like TerraUSD (UST) and Frax Finance (FRAX).

“When the USDD price is lower than 1 USD, users and arbiters can send 1 USDD to the system and receive 1 USD worth of TRX. When the USDD price is higher than 1 USD, users and arbiters can send 1 USD worth of TRX to a decentralized system and receive 1 USDD,” said Sun.

According to him, USDD is designed to have a smaller market capitalization than its main token TRON and smaller than Tron Dao Reserve. LUNA's fault, according to Sun, was because UST's market cap grew larger in a short period of time.

While the USDD stablecoin market cap is around a quarter of a million dollars. This amount is far below the market capitalization of USDT and USDC, which are USD 77 billion and USD 51 billion, respectively.

Tron DAO Reserve plans to hold TRX and BTC as collateral for the USDD stablecoin. The USDD algorithmic stablecoin will also be backed by 10 billion USDT, USDC, BUSD, DAI, and TUSD.

Previously, Justin Sun had also received criticism because he was considered to be imitating Terra UST's steps. However, SUN seems to have a different plan from the developer LUNA.