The meaning of “Stable” in Stablecoins changed in the month of May with the depegging of Terra. The cryptocurrency market, clenched in bear claws, is still recovering from the unhealed wounds. Already surrounded by hawkish Fed policies, the massive crash led to severe losses and some lost interest.
However, despite taking into consideration the current state of the market, TRON and Cardano are looking to add new stablecoins, which has raised concerns across the community.
We’re not the same as Terra!
The Cardano team announced the mainnet launch of Djed, a decentralized and algorithmic stablecoin built on Cardano. Djed uses Shen as a reserve token to ensure price stability in volatile economic conditions. It uses smart contracts to ensure price stabilization, and will be further useful for Decentralized Finance (DeFi) operations. As per the launch post on Medium.com, Djed is designed to become the ultimate coin with which Cardano’s network transaction fees will be paid.
Following the testnet, some key issues were identified which include “unavailable request” and “invalid collateral type”. COTI outlined that identifying such issues is normal and assured users that these issues will be sorted out prior to the release of the coin’s mainnet launch in June, as per the Cardano Feed.
Djed’s imminent mainnet launch is in a long line of Cardano’s recent developments. The Vasil hard fork is also set for launch towards the end of June with high expectations from the community.
TRON, the mighty!
TRON is another blockchain that is looking to initiate the launch of mainnet version of USDD. However, the path seems far more complicated for them due to the underlying similarities with the Terra stablecoin. There is still a lot of outrage since the Terra crash because of how the the LFG handled the situation. Hence, there has been a vocal dissent against the USDD launch as well.
In a news release, TRON described the collateral ratio as “guaranteed”. It has an even higher collateral ratio than DAI’s 120%, standing at at least 130%. The real-time collateral ratio of USDD is published on the TRON DAO Reserve’s website, publicly available 24/7.
Similar to Terra, TRON has invested billions in risk assets such as Bitcoin and other crypto to support USDD in times of volatility. This particular comparison has enraged the crypto sphere because Terra also had a huge Bitcoin reserve.
But TRON Founder Justin Sun believes the diversified reserves can actually help safeguard USDD.
He said, “The reserve backing we’re using right now is highly diversified. It includes bitcoin and all different kinds of stablecoin. USDC will be a part of our reserve, but it will only be a small part of our reserve.”
According to a TRON spokesperson, the reserve contains 14,040 bitcoin (around $418 million), 140 million USDT, and 1.9 billion TRX, as well as 8.29 billion TRX in a burning contract.
In retrospect, the ongoing bear market does pose a tricky future for these blockchains as investors and traders are still trying to recover from the havoc caused by the Terra debacle.