LUANCH OF USDD STABLE COIN & WHAT TO EXPECT - 10% to @Tron-Fan-Club

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Hello everyone and welcome to my blog.

It's no new information concerning the future launch of the USDD stable coin by the Tron founder and Steemit owner in the person of Justin Sun.

This yet-to-be-launched stable coin has been creating lots of waves and of cause, there should be reasons behind that which I would like us to look into.

Traditional stable coins, such as Tether (USDT) and USDC, rely on the backing of dollars in bank accounts. Instead, like TerraUSD (UST) and Frax Finance, USDD will be an algorithmic stable coin (FRAX).

To maintain its peg to the US dollar, the stable coin will use a system similar to that of these algorithmic stable coins. "When the USDD price falls below 1 USD, users can transfer 1 USDD to the system and receive 1 USD worth of TRX,". Users can also pay 1 USD worth of TRX to the open-source system and receive 1 USDD when the USDD price is higher than 1 USD." This will serve to keep balancing its demand and supply.

HOW TO GET THE USDD PEGGED TO US DOLLAR

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Since the USDD won't be following the traditional method of pegging stable coins to USD by relying on the banking of dollars in the bank accounts, it will be needing an asset that would be kept as a reserve in other to help keep it pegged to the USD.

Justin Sun who clearly said that a highly liquid asset will be used as a reserve for the USDD, still didn't state clearly the asset that would be used thereby leaving people to believe it will be TRX but what if it ends up being Steem?. Until it is official, our fingers should remain crossed.

Sun also made it clear that the stable coin will be available on BNB and Ethereum blockchains through the BitTorrent cross-chain protocol.

BENEFITS AND EFFECTS OF USSD STABLE COIN

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The yet to be launched USDD stable coins will have a lot of benefits and positive effects and they include;

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• Higher APR

The USDD is said to have an interest rate of 30%. This type of high APR is mostly found on volatile assets due to their risky nature and is very much high for a stable coin.

Sometime last month, the Hive based stable coin (HBD) increased its APR from 12% to 20% through a series of votes cast by their witness and it attracted a lot of investors thus leading to an increase in the Hive value which happen to be the only coin of which can easily be converted to HBD.

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• Arbitrage opportunity

Arbitrage traders on the network usually make use of USDT in other to avoid paying a high transaction fee. This leads to the increase in the volume of USDT but with the emergence of USDD, arbitrage traders on the Tron network will rather exploit their arbitrage opportunities using USDD.

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• POSSIBLE INCREASE IN TRX VALUE

The high APR of USDD will most likely draw in investors and this will lead to an increase in activity volume on the Tron blockchain and with the TRX being the native token of the network, it is bound to be affected positively.

Also, the launch of USDD is set to be leading to a burn of 1,250,000, 123 pieces of TRX worth ($98M).

• see below

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This burn will surely lead to an increase in scarcity of TRX and scarcity certainly increases value.

CONCLUSION

The launch of the USDD stable coin is filled with a lot of positivity and we are left with nothing but anticipation.

And the more good thing about it is the fact that it won't be pegged to the USD through a centralized means but in a decentralized manner and sooner than later all blockchains will embrace decentralized stable coins.