An Open Letter on the Issuance of USDD, a Decentralized Algorithmic Stablecoin on TRON | TRON DAO
Stablecoins have entered a new era.
Blockchain believers pursue to decentralize everything centralized, on the strong faith in the capabilities of mathematics and algorithms rather than violence and power in creating a desirable future for the world. Today, we see the possibility of decentralizing the blockchain world's most centralized territory.
TRON DAO joined hands with major blockchain players to launch USDD (Decentralized USD), the most decentralized stablecoin in human history, making finance accessible to all by applying mathematics and algorithms. As a result, it enjoys perpetual existence without relying on any centralized entities.
Evolving from the Stablecoin 1.0 and 2.0 eras represented by Omni-based and TRON-based USDTs, blockchain is now ushering into the Stablecoin 3.0 era. This movement will be led by TRON's USDD.
In the Omni-USDT 1.0 era, stablecoin with no native blockchains relied entirely on the Bitcoin network. Transfers typically took more than 30 minutes. Handling fees could cost up to $100. As there was a cap on the daily transfers conducted on the network (at 200,000), the total market cap of stablecoins stood at less than $1 billion. The associated dollar reserves were redeemed, managed, and stored by centralized institutions.
A great deal has changed fundamentally in the TRON-based USDT 2.0 era. USDT is issued on the TRON blockchain, which has an independent decentralized settlement layer. The time needed for a stablecoin transfer has been reduced drastically from 30 minutes to less than a second, and the handling fee from $100 to a few cents. The number of daily transactions has surged past 10 million, and the total value of transactions processed per day has reached a high of $10 billion. TRON has processed more than $4 trillion of USDT transactions since its launch in 2019.
Four years into the launch of the TRON-based USDT, TRON has grown into the world's largest stablecoin network, hosting more than $55 billion worth of financial assets. While stablecoins in the 2.0 era are exceptionally fast and affordable, their reserves are still stored, managed, and redeemed by centralized institutions.
Today, TRON is starting a self-imposed revolution, pooling all its resources to create USDD, a fully decentralized stablecoin underpinned by mathematics and algorithms, bringing the development of stablecoin to the next level. By building the most efficient and affordable stablecoin network in the global DeFi ecosystem, TRON aims to usher stablecoins into the 3.0 era led by the TRON-based USDD.
In the Stablecoin 3.0 era, USDD will not rely on any centralized institutions for redemption, management, and storage. Instead, it will achieve full on-chain decentralization. USDD will be pegged to the underlying asset, TRX, and issued in a decentralized manner. When USDD's price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD's price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD. Regardless of market volatility, the USDD protocol will keep USDD stable at 1: 1 against the US dollar via proper algorithms in a decentralized manner.
USDD on TRON is scheduled to be issued and enter circulation on May 5, 2022. It will also be available on Ethereum and BNB Chain through the BTTC cross-chain protocol. Prominent institutions in the blockchain space are welcome to support the USDD issued on TRON, Ethereum, and BNB Chain.
The roadmap of TRON-based USDD consists of four stages—1.0 Space, 2.0 ISS, 3.0 Moon, and 4.0 Mars—echoing both mankind’s and TRON's efforts in future space exploration. In 1.0 Space, the USDD management will be entrusted to the TRON DAO Reserve and other major blockchain institutions. The former will be tasked to provide custody service for the $10 billion worth of highly liquid assets raised from initiators of the blockchain industry, use them as an early-stage reserve, keep the exchange rate of USDD stable, and enforce convertibility fully.
Upon its establishment, the TRON DAO Reserve will set its basic risk-free interest rate to 30% per annum and facilitate other decentralized and centralized organizations that accept USDD to implement consistent interest rate policies.
The decentralized stablecoin USDD will free holders from central authorities' arbitrary impositions and eliminate all entry barriers. Unlike centralized institutions that may freeze or confiscate users' funds at will, decentralized stablecoins effectively safeguard private property rights.
The TRON DAO Reserve will shield users from inevitable market volatility. This will preserve their assets’ value. USDD on TRON marks a small step for developing TRON-based stablecoins and yet a giant leap for mankind in pursuing the ultimate financial freedom.
Our end goal is to make equitable access to financial services a fundamental human right. In time, financial services will become a necessity like water and air, accessible to people worldwide.
People should enjoy more than the four freedoms that Franklin Roosevelt once proposed – freedom of speech, freedom of worship, freedom from want, and freedom from fear. They should also be entitled to freedom of finance, freedom of wealth, and freedom to protect their private properties.
I believe that the TRON-based USDD will be one of the strongest cornerstones for the fifth freedom of humanity. USDD will be TRON DAO's most significant contribution to the world's financial freedom after the introduction of TRC-20 USDT. Let us work together towards more freedom for all the seven billion people worldwide and towards a better tomorrow.
April 21, 2022