Is TRON’s USDD Stablecoin Following the Same Path as Terra’s UST?

It has been barely two months since the Terra Ecosystem (LUNA) and its associated UST stablecoin collapsed. But now the market does not seem to have learned very much. Despite the fact that the Terra 2.0 ecosystem cannot yet be called a success, there is already a new stablecoin that seems to be the new center of attention.

USDD (also) a scam?

on YouTube and on Twitter Coffeezilla explains how Tron’s USDD stablecoin could become the new big problem. This stablecoin has a market value of USD 703 million at the time of writing and is therefore spot 73 in the market value ranking. That’s a lot less than Terra’s UST, which is on top nearly USD 19 billion was worth. Still, Coffeezilla thinks USDD could pose as much of a problem as UST.

There are a few agreements. USDD and UST are both algorithmic stablecoins, which use buying and selling algorithms to keep their value at $1. USDD also offers an absurdly high dividend. The Tron-DAO aims for a 30% annual yield† Yet USDD is barely two months old – just before the collapse of UST, Tron released USDD. The brand new stablecoin has therefore grown at lightning speed.

He also mocks Tron founder Justin Sun for his job as an ambassador for the Caribbean island of Grenada. According to the YouTuber, that gives him diplomatic immunity and the right to call himself ‘excellence’. He also likes to do that, according to the description in his Twitter account

dSun wallets would also be a source of frustration. He’s been in the news more than once, for example because of a governance attack on Compound. The Tron founder is said to have an inordinately large percentage of the votes for the DAO. So he can literally do whatever he wants with the ‘Decentralized Autonomous Organization’ (DAO).

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Ready for a crypto crash

Coffeezilla tracked a wallet believed to belong to Justin Sun. In addition to a huge number of votes on the DAO, this address also minted no less than 683 million USDD. At the time of writing, there are 723 million USDD tokens. Justin Sun himself has thus released 94% of all tokens.

The YouTuber thinks Sun did that to get rid of the Tron token (TRX) without crashing the market. If he manages to burn 1 TRX for 1 USDD and then sell the USDD, then you are rid of the TRX without affecting the price. This is of course dangerous, but it is a good theory for what is happening inside Tron.

A Ponzi scam is all about selling a financial product to unsuspecting buyers. As soon as the sale is finished, the financial product collapses, and the other investors are left with the fried pears.

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