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Justin Sun, the founder of Tron blockchain, in an announcement on Twitter, said that traders will now be able to earn rewards on the deposit of recently launched USDD, an algorithmic stablecoin created to operate like Terra’s all-but-defunct UST, to JustLend, which is a Tron-based lending protocol.
They will be able to earn yield in both USDD and the JUST stablecoin for depositing USDD.
A lending protocol, JustLend, is similar to Compound on Ethereum. However, Compound, as of now, has APY rates mostly in the low single digits; on the other hand, JustLend is promoting rates as high as 30% – despite the fact that the JUST also noted 70% earnings, and the rate keeps fluctuating throughout the day. It is also interesting to note that about 10 to 20 percentage points more than Anchor, Terra’s own lending protocol, was offered before a liquidity crisis there to a bank run that took down the network.
Sun declared Tron DAO last month. Tron DAO is an ostensibly user-controlled organization that takes the governance decisions about the network and will start issuing a decentralized stablecoin supported by TRX.
When the price of USDD is below 1 USD, users and arbitrageurs will be able to receive 1 USD worth of TRX on sending 1 USDD to the system, said Sun at that time. When the price of USDD is higher than 1 USDD, users and arbitrageurs will be able to receive 1 USDD on sending 1 USD worth of TRX to the decentralized system. This is the same system used by Terra.
Terra’s UST required a utility for keeping the system in order to keep the system propped up. Anchor Protocol provided this, as it was funded by the Luna Foundation Guard setup founders of Terra for promoting the ecosystem’s development. For depositing their UST, people who deposited their stablecoins were rewarded by Anchor.
Users escorted the bus as the interest rates began decreasing, redeeming their UST for LUNA, dumping LUNA, and as a result, it caused a death spiral leading to the entire network imploding, contributing to a greater market crash.
However, Tron and Sun got a backup plan similar to that one Kwon, and Terra had. Tron DAO declared that it is looking for 10 billion in assets for a reserve to be utilized in case of a financial crisis when Sun made the announcement regarding USDD.
Luna Foundation Guard had the same target as the LUNA foundation guard. Terra, however, only managed to collect $3 billion in a combination of Avalanche, Bitcoin, LUNA, and UST. Interestingly, it wasn’t enough to cease the crash of an $18 billion stablecoin and $30 billion network token.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
