Stephanie Douse 
According to announcement on Twitter, Justin Sun, the founder of Tron, has announced the launch of USDD, a decentralized algorithmic stablecoin that might help decentralize the most centralized zone in the blockchain world.
The new decentralized stablecoin will be available on Tron on May 5th, according to the release.
The Stablecoin’s Specifications
Traditional stablecoins like the USD Coin (USDC) and Tether (USDT), which are backed by money (USD) and other assets held in an account, will not work with the new USDD stablecoin.
Similar to TerraUSD (UST) and Frax Finance, the new USDD stablecoin will be an algorithmic stablecoin (FRAX). The USDD will be issued as a TRC token on the Tron network at first.
The USDD stablecoin will use a technique similar to algorithmic stablecoins and will keep its peg to the US dollar. Sun explained the USDD stablecoin’s mechanics as follows:
“When USDD’s price is lojustinwer 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 worth of TRX to the decentralized system and receive 1 USDD.”
Sun claims that the algorithm used by USDD will allow the stablecoin to keep its peg to the US dollar regardless of market fluctuations.
USDD stablecoin to be managed by Tron DAO
The USDD stablecoin will be managed by the Tron DAO, a decentralized autonomous organization (DAO) that will administrate a reserve with a 30% interest rate.
The DAO will also give $10 billion in custody reserves. The USDD stablecoin will be backed by these assets, which will be very liquid.
This strategy is similar to that of Do Kwon, the Founder and CEO of Terraform Labs, who has revealed plans to buy $10 billion in Bitcoin to serve as UST reserves.
Sun, on the other hand, has not specified which assets will be used as collateral for the USDD, only noting that they will be highly liquid and raised from blockchain industry pioneers.
Do Kwon praised Justin Sun’s Tron stablecoin effort, saying that “decentralized economies deserve decentralized money” and that “eventually, every blockchain will run on decentralized stable currencies.”
The USDD stablecoin will be available on BNB Chain and Ethereum, according to Sun, and will be released via BitTorrent Network’s cross-chain protocol.
Sun highlighted why a local stable currency was necessary for Tron, claiming that the gradual expansion of USDT transaction volume signaled the need for USDD.
Traders looking for arbitrage opportunities without paying high transaction fees have flocked to USDT, which has grown in popularity on the network.