Tron's TRX Token Jumps 7% On News of Native Algorithmic Stablecoin

The cryptocurrencycryptocurrency underpinning the Tron network has enjoyed a heady boost over the past day. 

According to data pulled from CoinMarketCap, TRX has risen by more than 7% in the last 24 hours. The jump now has the token trading hands at almost $0.07.

Tron was launched in 2017 at the peak of crypto’s then-massive bubble. It sought to resolve many prominent issues facing blockchain networks, including high transaction fees and slow speeds. 

Though it can host various dAppsdApps and DeFi projects, the network has never reached the same prominence as similar smart contract platforms such as Ethereum, Solana, Avalanche, and others. 

When checking out the last time TRX hit an all-time high, this lack of traction becomes clearer. It was all the way back in January 2018 when the token reached highs of roughly $0.30. 

Since then, it’s dipped, dived, and recovered, but never reached the same levels. 

TRX

-0.88%$0.2441

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TRX price

Today’s blip does, however, come on the heels of a new announcement. 

Yesterday, Tron’s creator Justin Sun announced the launch of a new algorithmic stablecoin for the network called USDD. 

What is Tron’s USDD?

With Sun’s announcement, Tron is entering the world of algorithmic stablecoins. 

Unlike more traditional fiat-backed stablecoins like Tether’s UST or Circle’s USDC, algorithmic stablecoins are backed by cryptocurrencies and rarely have a centralized entity overseeing their health. 

MakerDAO’s DAI stablecoin is perhaps the oldest example of this variety of stablecoin. To mint DAI, users must deposit a cryptocurrency like Ethereum as collateral.

Another example is the fast-growing UST from the Terra ecosystem. 

Terra's Stablecoin UST Becomes Crypto's Third-Largest

First DAI, now BUSD. Terra’s UST is on a tear.  Today, the fast-growing TerraUSD (UST) stablecoin from the Terra ecosystem has hit another key milestone. With more than $17 billion in market capitalization, it's become crypto’s third-largest stablecoin. Terra's stablecoin overtook Binance USD (BUSD) to grab third place, but the gap is thin: roughly $68 million. The leading stablecoin as of this writing is Tether (USDT), which commands a whopping $82 billion market cap. USD Coin (USDC) is second...

Like DAI, UST is also backed by cryptocurrencies. It does, however, have a rather unique “mint-and-burn” technique in which $1 of LUNA, Terra’s native token, is destroyed to mint 1 UST. 

Tron’s USDD appears to mimic this mechanism: Destroy TRX to mint USDD.

What’s more, Sun said that “the TRON DAO Reserve will set its basic risk-free interest rate to 30% per annum.”