Justin Sun Promotes High-Yield, Terra-Inspired Stablecoin on Tron – Decrypt

In brief

• Terra’s stablecoin tokenomics led to the network’s collapse.
• Tron’s algorithmic stablecoin playbook looks strikingly similar.

Tron blockchain creator Justin Sun announced via Twitter nowadays that traders can now earn rewards for depositing the network ‘s recently launched USDD, an algorithmic stablecoin designed to work like Terra ‘s all-but-defunct UST, to Tron-based lending protocol JustLend .
For depositing USDD, they ‘ll earn return in both USDD and the JUST stablecoin .
JustLend is a lending protocol on Tron akin to, say, Compound on Ethereum. But whereas Compound presently offers APY rates largely in the low single digits, JustLend is advertising rates a high as 30 % —though JUST besides pointed to 70 % earnings, and the rate has been adjusting throughout the day. ( Tron representatives have not so far responded to a Decrypt request for gossip on how the yield works. ) That ‘s about 10 to 20 percentage points more than Terra ‘s own lend protocol, Anchor, was offering before a liquidity crisis there led to a bank run that took down the network .
Tron ‘s move is straight out of the Terra playbook—at least the one that was written before Terra ‘s native nominal LUNA and UST stablecoin collapsed.

# USDD mining is alive nowadays on hypertext transfer protocol : //t.co/AzvfhEjc3G with 40 % APR. You can now deposit your # USDD in Justlend. pic.twitter.com/6WhX9fhpEP
— H.E. Justin Sun 🅣🌞🇬🇩 ( @ justinsuntron ) May 12, 2022

end calendar month, Sun announced that Tron DAO, the apparently user-controlled arrangement that makes government decisions about the network, would begin issuing a decentralized stablecoin backed by TRX .
Wrote Sun at the prison term : “ When USDD ‘s price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD ‘s price is higher than 1 USD, users and arbitrageurs can send 1 USD deserving of TRX to the decentralized system and receive 1 USDD. ”
That ‘s precisely the same system that Terra uses .
furthermore, to keep the system propped up, Terra ’ s UST needed a utility. That was provided by Anchor Protocol, which was funded by the Luna Foundation Guard—set up by Terra ‘s founders to promote development of the ecosystem. Anchor rewarded people for depositing their UST stablecoins. As matter to rates began declining, users hopped off the tramway, redeemed their UST for LUNA, dumped LUNA, and caused a massive end spiral that caused the integral net to implode and contributed to a larger crypto market crash .
But Sun and Tron have a accompaniment plan—the like one Kwon and Terra had. While Sun was announcing USDD, Tron DAO announced that it was seeking $ 10 billion in assets for a military reserve to be used in case of a fiscal crisis. That ‘s the like target Luna Foundation Guard set for its modesty. Of class, Terra was only able to raise $ 3 billion in a combination of Bitcoin, Avalanche, UST, and LUNA. And that was n’t adequate to stop the break down of an $ 18 billion stablecoin and $ 30 billion network keepsake .
The knock on Tron and Sun from the beginning has been that it ‘s derived function. many observers pointed out that Tron ‘s white composition was suspiciously similar to the Ethereum white newspaper. Tron ‘s 2020 embrace of DeFi besides bore many of the hallmarks of Ethereum ‘s .
“ We are creating the lapp kind of DeFi ecosystem as Ethereum, ” Sun said in October 2020. “ All the Ethereum network products, you can see a lapp version of Tron products. For example, the MakerDAO on Tron is called JustStable, created by the JUST team. And UniSwap is called JustSwap. ” ( The team behind JUST, which besides created JustLend, is nameless. )
To be bonny, Tron did n’t copy Ethereum ‘s proof-of-work consensus mechanism or dull speeds. It boasts transactions per seconds in the thousands ; its basic deal point has been that it can accommodate all the things Ethereum can while doing it faster and cheaper. ( Whether it can do so while making the network more decentralized and without running into security problems is up for debate. )

Its pivot to embrace Terra ‘s tokenomics is in the lapp vein : Like Terra but better and bigger concern rates. hopefully without the big bust at the end .
There are batch waiting to laugh off the move—Sun has attracted negative urge for report mismanagement of software firm BitTorrent and crypto exchange Poloniex, both of which he owns. furthermore, his copy pasta reputation still haunts him .
But they probably should n’t .

Though it has been affected by this month ‘s crypto barge in, Tron has weathered the storm better than most. It now ranks 14th in commercialize detonator among all crypto assets, between Wrapped Bitcoin and Shiba Inu, with $ 7.25 billion .
For the consequence, USDD has a a lot smaller footprint within the larger crypto ecosystem, with just $ 271 million in circulation—but it ‘s already surpassed Gemini Dollar after launching fair last week .
Terra, host of the third -largest stablecoin, was calm large enough to wreak havoc for holders across assets. If Tron keeps up the growth jet and the USDD experiment fails, there ‘s no good recovery scheme for Sun to imitate .

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Category : Coin