The Tron blockchain saw a sharp rise following the public release of $USDD, the project’s new algorithmic stablecoin. Tron boasts a massive +41.68% increase this month, with a +13.30% rise over the past week. This massive increase has seen Tron become the third-largest blockchain in terms of total value locked (TVL). Only two other chains lead Tron in terms of TVL, the popular Binance’s BNB Chain and Ethereum. BNB Chain has about $8.8 billion in TVL at a 7.95% share, with Ethereum having $71.22 billion at a 64.27% dominance by TVL.
Although the entire crypto space has been on some bearish run for a while, the bullish indicators shown by Tron have mainly been a result of the launch of its new $USDD (Decentralized USD), its latest algorithmic stablecoin which promises an APY of 20%. The majority of cryptocurrencies in DeFi and Web3 spaces, such as Ethereum, Polygon, Solana, Avalanche, BNB Chain, and Fantom, have been declining for the past month, with the bear market signaling a longer duration for this particular cycle.
The USDD algorithm is an arbitrage between USDD and TRX, the native token of the Tron network. Tron’s USDD is not backed by anything, as it is not backed by fiat or the U.S dollar. Instead, it is an algorithmic stablecoin that is governed by smart contracts. Data from Tron’s block explorers show that about half of the capital for its TVL is flowing from its DeFi lending and borrowing protocol, JustLend (JST). Recently, JustLend publicly disclosed that an annual yield of 23% can be achieved if USDD becomes locked on its protocol.
When compiling this report, USDD’s market capitalization has risen to over $602 million, having climbed more than 120% in the last two weeks. If any coin is going to challenge Ethereum’s dominance on the overall TVL, it will be Tron. Although it is likely that Ethereum will continue to lead for some time, given its popularity and scalability, however, with Tron’s rapid growth, a shift in rank might be sooner than expected.
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