Will TRON’s USDD and 30% interest rate collapse like UST?

TRON has become the third-largest blockchain network by total locked-in value on the DeFi ecosystem after the launch of stablecoin USDD.

TRON’s DeFi ecosystem benefits from the new stablecoin, which has a very high-interest rate. According to data from Defillama, TRON’s DeFi ecosystem has grown by about 26% over the past month, rising from about $4 billion to $5.46 billion, surpassing other popular Layer 1 networks such as Avalanche and Solana to become the third-largest Blockchain in terms of total locked value, just behind Ethereum and BNB Chain.

TRON’s ecosystem has risen sharply due to the “hot” growth of the recently launched stablecoin, USDD, which has promised investors a 30% interest rate.

The USDD is designed to be a “cryptocurrency issued by the TRON DAO securities guarantee fund at“stable” prices through “ integrated incentive mechanisms and monetary accountability policies. ”

This mechanism allows the asset to “stabilize itself against any price movement,” similar to how Terra’s LUNA tokens and Bitcoin reserves were intended to stabilize the UST before it collapsed.

USDD “risk-free” 30% interest rate

The network founder raised controversy because Justin Sun had promised a 30% “risk-free” interest rate on the USDD. While it is unclear where Justin Sun derives this profit, the recent development of DeFi in the TRON ecosystem suggests that this incentive mechanism is intended to attract more users. Currently, the market capitalization of USDD is about USD 545 million.

Although the USDD has helped TRON thrive over the past few weeks, many still raise questions for TRON DAO. The reason is that USDD’s official “custodian” has not highlighted any risks associated with stablecoin and its new algorithm anywhere in official documents or public communications.

After all, the USDD behaves like Terra’s UST, which ended Terra’s ecosystem with a terrifying $40 billion collapse. During the collapse of Terra, when the UST began to devalue against the USD, it surpassed the capitalization of the LUNA, signaling that the failure was imminent.

If USDD continues to grow, it could soon surpass TRON’s $7.74 billion capitalization (TRX). Since TRX is supposed to support USDD, it could mean that this stablecoin will suffer the same fate as UST. There is a high chance that UST version 2 will become available if Justin Sun does not change the USDD model, which will go into Do Kwon’s “crash trail.”

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

CoinCu News

KAI

Victor

Recent Posts

Best Cryptos to Invest in December 2024: Qubetics Surges Past $2.6M as Solana Records Big Whale Pump and Polkadot Aims for $6

Best Cryptos to Invest in December 2024: Qubetics surges past $2.6M, Solana’s whale pump ignites…

1 hour ago

Bitcoin Trader Turned $100M in His 20s—Now Reveals 5 Altcoins to Build a $50M Portfolio, With Memecoins Leading the Way!

As Bitcoin reaches unprecedented heights and the market surges, he's highlighting five altcoins poised for…

3 hours ago

Which Crypto Will Explode in the 2024-2025 Bull Run?

With the crypto market reaching new peaks, many are eager to discover digital currencies poised…

3 hours ago

Dogecoin and Shiba Inu Approach $1, but All Eyes Are on XYZVerse’s Push to $10!

XYZVerse, blending sports passion with meme energy, is set to make a significant impact, uniting…

3 hours ago

Will Bitcoin Crash or Soar Past $105K in 2024?

Will Bitcoin Crash?" seems to be one of the most controversial questions, as the price…

4 hours ago

The Best Crypto for Passive Income? 10% Weekly Gains and 20% Final Surge—Qubetics Mirrors Cosmos’ Early Success!

There’s always that one coin people wish they hadn’t overlooked. For many, Cosmos ($ATOM) is…

5 hours ago

This website uses cookies.