Justin, Justin, Justin. What are you planning now?
Justin Sun, the founder of Tron has been at least a controversial figure in the crypto industry.
What’s the deal? TronDAO announced the release of their own stablecoin: USDD.
Backed by? 10B, is what will be backing the new stablecoin by the Tron Foundation TronDAO. And for the stablecoin ecosystem, at least compared to TerraUST, it's a lot of money.
The DAO will achieve this by raising funds from the most prominent blockchain industry players
USD and D, why? D for Decentralized.
It is obvious that a big stablecoin season is coming and we had been talking a lot about them lastly.
What Do You Need To Know About a Stablecoin
First, how is pegged.
Is it peg to off-chain assets such as fiat, a basket of assets, commodities?
If it isn't pegged to off-chain assets on-chain assets are the way to go.
At least, till now this is binary: are they off-chain or on-chain assets.
Off-chain assets when used as reserve (often referred to as collateral that backs up the stablecoin peg) deal with fears of centralization and bad behavior from institutions.
This is, for example, the case of the very own Tether, which we all know they have dollars *out of thin air*, but still, it's the number one stablecoin by market cap.
Is this because of the First-Mover Advantage?
USDC tried to fight against bank centralization by diversifying their reserves across a set of banks, but still, we are relying on the enemy to secure the value of our stablecoins.
This is where DAI and MakerDAO came in with on-chain collateral assets.
Given DAI is on-chain backed, the only way to decentralize a reserve is through the implementation of loans to mint freshly DAI supply.
A lenders and borrowers game but applied to stablecoin.
And after DAI, the algorithmic stablecoins.
This is where things get complex as it has been one of the most successful models for stablecoin peg lastly.
The champion? UST.
The last trend I saw on stablecoins was set by FRAX, a partially collateral stablecoin: a mix of the best but also the worst of both worlds. A mix of DAI and UST.
On one side, the risks of massive liquidations will always be there.
On the other side, the risks of lower demand will always be there.
How do they fight against this?
DAI will sell MKR tokens (from MakerDAO holders) to open market in case of a Shortfall Event due to insolvency.
UST will give one of the best yields out here in stablecoins.
If one of these mechanisms fails...Nothing good can come out of that.