Tron Will Create An Algorithmic Stablecoin To Be Like Terra

Tron will create an algorithmic stablecoin to be more like Terra and it plans a $10 billion fundraising for a reserve fund so let’s read more today in our latest Tron news.

Initially, it was labeled an ETH killer but now it wants to become a Terra destroyer. Tron is a blockchain that boasts smart contracts and decentralized applications on a scalable network and gets into the algorithmic stablecoin game the creator Justin Sun announced that the Tron DAO, the restructure Tron Foundation allows users to take part in governance and decision making about the network and will be issuing a USD Stablecoin in May.

In an announcement, Tron DAO said it will raise up to $10 billion in reserves from prominent blockchain industry players in the next six to 12 months and the goal is to provide liquidity in case of emergency to the stablecoins issued on Tron including both Tether and USDD while also keeping their value stable coin during the cases of the financial crisis. Stablecoins are the lifeblood of smart contracts networks and help users to transition between applications including games, apps, and decentralized exchanges without dipping back into the fiat currency world.

Stablecoins like Tether’s UsDT and USDC are designed to keep a peg to the US dollar in a simple mechanism so people have to pay $1 for each 1 stablecoin that is minted and the stablecoin issuer puts these deposits in the bank and facilitates the redemption so that the coin holders have confidence in the continued value. The truth is more complicated since years after claiming that every USDT was back by the $1 dollar in a bank and Tether admitted that the reserves included cash equivalents as well as other holdings like digital assets.

Tron is already a popular network for Tether and the Tron-based USDT with a market cap of $41.7 billion compared to $39.8 on Ethereum as per the latest data. It also says that it is not looking to make another centralized stablecoin but wants to create a decentralized stabelcoin that will be backed by the algorithm and not cash. The model is that Terra’s network UST stablecoin is the third biggest stablecoin by market cap which connects the network’s LUNA token to keep in check. The UST peg is maintained in a burn mechansim so you have to destroy LUNA to mint UST and vice versa.

Tron will create an algorithmic stablecoin and has confidence that the UST will hold its peg and will be deployed in a new strategy whereby the Luna Foundation Guard that exists solely to support the Terra network and bought over $1 billion worth of BTC for the reserves in the case of peg slips while LFG says it plans to buy another $100 million in Avalanche as it starts the reserves.