The cryptocurrency 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 dApps 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.
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.
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.”
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
The best of Decrypt straight to your inbox.
Get the top stories curated daily, weekly roundups & deep dives straight to your inbox.
