Justin Sun: No fear of decoupling, the Fed can provide the most solid guarantee for USDD

On May 5, the well-known public chain TRON officially launched the decentralized stablecoin USDD. The latest circulation has exceeded 270 million, and the corresponding TRX destroyed has exceeded 3.3 billion.

So can the decentralized stablecoin USDD successfully deal with the decoupling incident? Golden Finance recently interviewed Mr. Justin Sun, the founder of TRON.

Golden Finance: On April 21, you issued an open letter stating that the decentralized stablecoin USDD of TRON will be launched on May 5. Currently, we can see that USDD has been launched and circulated. Could you please first introduce the development of centralized stablecoins such as USDT on TRON?

Justin Sun: TRON has actually firmly established itself as the absolute leader in the stablecoin field. After the launch of USDD, this position will be further strengthened. Currently, USDD has been launched and circulated on TRON, Ethereum, and BNBChain, and has landed on mainstream platforms such as SUNSwap, Uniswap, Curve, PancakeSwap, and Ellipsis Finance. The latest issuance volume has exceeded 270 million, corresponding to the destruction of more than 3.3 billion TRX.

The TRON version of USDT is the mainstream stablecoin preferred by more blockchain users. With its transparent security, near-zero transfer fees, and seconds-to-account, the TRON version of USDT is very popular among exchanges, corporate users, and individual users, and also provides investors with an extremely convenient blockchain entry point.

According to the data, with the continuous issuance of Tether on the Tron network, the issuance of Tron USDT exceeded 40 billion for the first time in March this year, and has now reached 42.7 billion. In terms of the number of holding accounts, the Tron USDT has made a historical leap from 1 million to 10 million in the past year, with monthly user growth reaching millions. More importantly, since its launch in 2019, the total amount of Tron USDT clearing has exceeded 4 trillion US dollars, driving the rise of crypto payments dominated by stablecoin transfers around the world.

It can be said that the demand for TRON USDT has been soaring over the past few years. This is not only due to the phenomenal development of the blockchain industry in the past few years, but also due to the huge user base and strong industry influence of TRON as a high-performance public chain in the industry. It is believed that with the upgrade of TRON DeFi and the continuous strengthening of the on-chain ecological construction, the application scenarios of TRON USDT will be further expanded in the future, providing high-quality, inclusive and efficient financial services to more users around the world.

Golden Finance: When the circulation of TRC20-USDT has already dominated stablecoins, what are the considerations for issuing USDD?

Justin Sun: As you said, after TRC20-USDT surpassed Ethereum USDT in circulation for the first time in April 2021, its dominance in the stablecoin field has gradually consolidated in the past two years. However, the blockchain world always seeks to decentralize all centralized things, including stablecoins. In the long run, decentralization must be its final destination, and it is also the most in line with user needs and industry interests. To put it more bluntly, the large number of centralized products circulating in the current blockchain world is contrary to the spirit of the industry, and the current situation where the stablecoin ecosystem is heavily dependent on the centralized system needs to be changed.

From the perspective of the industry development process, decentralized stablecoins have already met the conditions for expansion, which can be seen from the expansion of the decentralized stablecoin volume and the changes in user perception. Therefore, TRON, as a public chain with the most powerful transfer and settlement system in the industry and a leading position in the field of stablecoins in terms of user scale and development experience, should stand up and carry the banner of stablecoin decentralization when conditions are ripe.

As I said in my open letter, after achieving success in the TRON USDT2.0 era, TRON DAO revolutionized itself and made every effort to build TRON USDD, hoping to push the development of global stablecoins to a new level. Because no matter how successful centralized stablecoins are, they are still redeemed and managed by centralized institutions, which will not only be more susceptible to regulatory influences from various countries, but also the fiat currency stored offline cannot be queried and constrained through on-chain contracts. USDD and TRC20-USDT are also built on the high-performance public chain TRON, and naturally have the stablecoin genes of high speed, low fee, and high scale, but are completely decentralized, relying on mathematics and algorithms, which is similar to a lossless internal upgrade for the development of stablecoins.

In short, only purer decentralization can truly take the global influence of blockchain to a new level, which is a topic that has a particularly far-reaching impact on the industry. TRON's issuance of USDD is like what the Chinese often say, "It will benefit the present and future generations."

Golden Finance: What is the operating mechanism of USDD? How to ensure the stability of USDD? Will decoupling occur?

Justin Sun: USDD is a decentralized algorithmic stablecoin initiated by TRON Joint Reserve and mainstream blockchain institutions. It runs on the TRON network and is connected to Ethereum and Binance Chain through the BTTC cross-chain protocol. As a stablecoin, USDD first needs to meet the needs of the majority of users for stable digital currencies. Therefore, USDD uses the most widely used U.S. dollar (USD) as an anchor to ensure that users can use a stable, decentralized, and tamper-proof USDD dollar system.

At the same time, the USDD protocol uses an oracle to obtain the real price of USD. The oracle service is provided by the TRON network super representatives, who vote in each voting phase, count votes every N blocks, and take the weighted median of each super representative's vote as the real price. The USDD protocol uses the price obtained by the weighted median of the voting results as a benchmark, rewards super representatives whose voting results are within the deviation value, and punishes super representatives whose voting prices are outside the deviation value range. As a high-performance public chain in the industry, the TRON network has never had a security incident in its operation for many years, and it can obviously provide the most convenient and reliable oracle service for USDD, which is a prerequisite for the stability of USDD prices.

In addition, USDD uses TRX to achieve a peg to the US dollar and maintain its price stability. In simple terms, the price volatility of USDD is absorbed through the super representatives of TRON, making TRX the most direct defense against USDD price fluctuations. In the short term, if the price of USDD is lower than the target price, the super representative will mint TRX by destroying USDD, prompting USDD to return to the target price. When the price of USDD is lower than 1USD, arbitrageurs and users can use 1 USDD to exchange TRX worth 1USD in the USDD protocol; when the price of USDD is higher than 1USD, arbitrageurs and users can use TRX worth 1USD to exchange 1USDD in the USDD protocol.

As for the decoupling issue, in addition to USDD's perfect arbitrage mechanism, TRON DAO Reserve can provide the most solid guarantee. Logically speaking, TRON DAO Reserve came first, and USDD came later. Extreme market conditions have always been the "natural enemy" of decentralized algorithmic stablecoins, and the so-called decoupling often accompanies them. As an important innovation in the industry, the main purpose of the TRON DAO Reserve is to protect the blockchain industry and market, alleviate extreme and long-term downward market conditions, and solve the panic problems caused by the financial crisis. At the beginning of its establishment, TRON DAO Reserve will preserve and host $10 billion in highly liquid assets raised by blockchain industry promoters as early reserves.

Currently, Alameda Research, Amber Group, Poloniex Exchange, Ankr, and Mirana have all become members and whitelist institutions of the Federal Reserve of Poland. As the Federal Reserve of Poland continues to grow, the process of USDD defending human financial freedom will also be accelerated.

Golden Finance: Many public chains have begun to issue algorithmic stablecoins, such as Near recently issued USDN, and Tron also issued USDD. Is this a trend? What is unique about USDD compared to them?

Justin Sun: In fact, algorithmic stablecoins are not very new, and have been developing with controversy in the past two years. However, judging from the current development momentum of decentralized stablecoins, changes in user perceptions and industry fundamentals, and the inherent development needs of blockchain towards greater decentralization, algorithmic stablecoins are indeed becoming a trend. The growth rate of the stablecoin market value has been much higher than the entire crypto market in the past year, and the position of algorithmic stablecoins in this field has grown by leaps and bounds.

In addition, all major public chains hope to use algorithmic stablecoins to boost the development of their own ecosystems. Stablecoins are one of the most important traffic portals in the industry, and they are of great significance to on-chain transaction volume, user activity, and DeFi ecology. However, looking back at the development history of stablecoins, we can find that whether the public chain itself is strong enough is often the strongest support for stablecoins. This is why the leading public chains such as TRON and Ethereum are currently the best in stablecoin development. The competition for decentralized stablecoins will also be the same to a large extent.

For USDD, its uniqueness lies first in its backing on the TRON public chain. TRON achieved full decentralization in December last year and is now a decentralized autonomous organization (DAO) governed by the community. More importantly, TRON's user scale and accumulation in the field of stablecoins are second to none in the industry. As of now, the total number of TRON public chain users exceeds 92 million, the number of transactions exceeds 3.1 billion, and the cumulative clearing and settlement of US$4 trillion. It also has a complete DeFi layout with SUN and JST as the ecological foundation, which will provide the most direct support to USDD.

In addition, USDD is also strongly backed by the Federal Reserve of TRON, which is also unique. As the industry's first decentralized central bank, the Federal Reserve of TRON not only alleviates extreme market conditions, but also has the functions of regulating the risk-free interest rate of stablecoins in TRON and other blockchain networks, protecting the exchange rate stability of decentralized stablecoins, and keeping financial reserve assets.

As for USDD itself, it will continue the high-speed, low-fee, and high-scale model standards of TRON USDT in the stablecoin 2.0 era. USDD has the characteristics of zero threshold for holding; low volatility, achieving the purpose of wealth preservation and appreciation; and achieving the inviolability of private property in the full sense. At the same time, the BTTC cross-chain protocol will make USDD naturally have the differentiated advantages of multi-chain deployment. All of these will help USDD emerge as a new force in the field of decentralized algorithmic stablecoins and usher in the stablecoin 3.0 era.

Golden Finance: The key to the success of algorithmic stablecoins is to have an ecosystem or many projects adopting it. Currently, which projects use USDD? Which chains will USDD be listed on?

Justin Sun: Indeed, if algorithmic stablecoins want to grow rapidly in the early stage of issuance, they not only need to have a strong ecosystem to support them, but also need to efficiently promote expansion and cooperation with project parties. From this perspective, USDD has made many pragmatic progress after its issuance, which has rapidly expanded the application scenarios of USDD. At present, SunSwap, SUN, PancakeSwap, Ellipsis Finance, Uniswap, Curve, and KyberSwap have become USDD DeFi trading platforms.

Specifically, after USDD was officially issued on May 5, it immediately entered Ethereum and BNBChain for circulation through the BTTC cross-chain protocol. Currently, the circulation volume on Ethereum and BNBChain has exceeded 40 million.

SUN.io on TRON has launched a new 3pool liquidity mining pool, including USDD, with an APY of up to 57% at present; SunSwap has opened multiple liquidity trading pairs for USDD, including USDD-TRX, USDD-USDT, USDC-USDD, TUSD-USDD, etc., and high-yield mining is in full swing; JustLend has also officially launched USDD deposit mining, and after the launch, the deposit mining APY is as high as 70%. At the same time, JustLend's USDD market collateral factor has been increased to 85%. Users depositing the same amount of USDD will be able to borrow more assets, which will greatly increase the utilization rate of USDD funds.

In addition, Ellipsis Finance (EPS) on BNBChain has opened a USDD/3EPS mining pool, and the current APR income is considerable; Curve on Ethereum has also officially launched a USDD/3CRV LP mining pool, and the current APR is as high as 30.87%-77.175%. The new BitTorrent Chain mining pool on KyberSwap has also added USDD. The mining pool currently has more than a dozen liquidity trading pairs to choose from, and liquidity mining will last for 4 months, with a total reward of 1.5 million US dollars.

According to the plan, USDD is divided into two types of mining platforms. One type is the designated mining platform, which includes SunSwap, SUN.io, JustLend, and the centralized platform is Poloniex. The designated platform cooperates with TRON DAO Reserve to guarantee a rigid interest rate of 30% to the maximum extent. The second type of platform is the cooperative mining platform. The interest rate return of the cooperative mining platform is jointly supported by TRON DAO Reserve. The interest rate will fluctuate around 30%. TRON DAO Reserve will do its best to guarantee the interest rate return of the cooperative mining platform.

Let me give you a heads up here: USDD will continue to be listed on more of the world’s top exchanges and wallets in the future, so stay tuned!

Golden Finance: According to the open letter, USDD will have four versions: space, Tiangong, moon, and Mars. Can you explain why this is the design? What goals does each version achieve?

Justin Sun: The development of TRON USDD will be divided into four versions: space, Tiangong, moon, and Mars. In fact, it symbolizes the four goals of human beings and TRON in participating in space exploration in the future. Because space and blockchain are both important journeys for the future of mankind and the inevitable trend of human history, the courage, adventurous spirit and pioneering spirit contained in them are essentially the same. As a new force in the blockchain industry, decentralized stablecoins should have such attributes and the ambition to continue to expand.

In the 1.0 space phase, USDD will be issued and fully circulated, and the TRON DAO central bank and its shareholder whitelist institutions will become the first minters of USDD. In the 2.0 Tiangong phase, the USDD decentralized network test network will be launched, and the TRON test network super representative will run the oracle node to test the stability of the price feed system. In the 3.0 lunar phase, the USDD decentralized network will be officially released, realizing the fully decentralized minting, exchange, and destruction of USDD, and the minting and destruction rights will be fully transferred to the TRON network. In the 4.0 Mars phase, the USDD decentralized network main network will be officially launched, and the TRON DAO central bank will transfer all USDD issuance and destruction rights to the TRON USDD main network.

After going through the above stages, the TRON ecosystem will eventually complete the support for the USDD protocol from multiple links such as community ecology, wallets, browsers, exchanges, and mining. I believe that the stablecoin 3.0 era dominated by TRON USDD will inject more energy into the development of blockchain, and TRON DAO will also provide a more decentralized future for many investors.

Golden Finance: What plans does TRON DAO have in the future to promote further adoption of USDD?

Justin Sun: TRON DAO will spare no effort to promote the widespread use of USDD. As I said in my open letter, we are now facing the possibility of decentralization of the most centralized part of the blockchain world (stablecoins). TRON is determined to lead the industry into the stablecoin 3.0 era and accelerate the realization of human financial freedom.

At present, the issuance of USDD has exceeded 270 million, and the corresponding TRX destruction has exceeded 3.3 billion, with an amazing growth rate! Based on this, the TRON Joint Reserve has authorized 1 billion USDD, and the specific issuance and circulation will be determined by market demand. At the same time, the TRON Joint Reserve will continue to expand its members and whitelist institutions, continuously expand its reserves, lay a solid foundation, and ensure the stability and decentralization of the USDD exchange rate. Here, more high-quality institutions are also welcome to join the TRON Joint Reserve.

Under extreme market conditions, the TRX Federal Reserve has recently increased its reserves several times. First, on May 7, it bought 504,600,250 TRX at an average price of $0.07727 for $38,993,043, and then bought TRX, BTC and USDT several times. The most recent one was on May 13, when it spent $36,730,197 to buy 1249.57 BTC at an average price of $29,394. This not only ensures the security of the entire blockchain industry and the crypto market, but also keeps TRX and USDD stable during this market fluctuation. I believe that the combination of USDD and TRON's joint reserves will be a powerful weapon to defend personal financial sovereignty.

In addition, the TRON network will leverage its advantages of hundreds of millions of users and active on-chain transfers to divert USDD traffic, and TRON's increasingly stable DeFi ecosystem will also be fully integrated with USDD. Through the BTTC cross-chain protocol, USDD will enter more mainstream public chain circulation in the future, bringing convenience to users on different blockchains and improving the efficiency of capital utilization. Recently, the second season of the 2022 TRON Hackathon Competition is about to start. The promotion of the event will strengthen BTTC's cross-chain ecology, enhance the activity and innovation of the TRON network, and realize the prosperity and development of assets on TRON, including USDD, on more blockchains.

We believe that with the Federal Reserve strictly enforcing the USDD 30% base risk-free interest rate and the successive launch of USDD designated and cooperative mining platforms, USDD will quickly accumulate its first batch of supporters, and its issuance and user adoption will also steadily increase.