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There is Trust in Stablecoins. Active Development of Tron USDD.

While Terra is being consumed by the death spiral, Tron is strengthening its position in the market.

 China Group
Photo by Jiang Xin/Visual China Group via Getty Images

While Terra is being consumed by the death spiral, Tron is strengthening its position in the market.

After the collapse of Terra, many people started talking about how this could negatively affect the future of stablecoins in general. As a rule, this was attributed to the fact that investors had lost confidence in algorithmic coins and no one would want to take risks.

But in practice, you can see something completely different. While Terra is gripped by a death spiral, another algorithmic stablecoin is strengthening its position and increasing its capital.

We are talking about a decentralized Tron USD (USDD) stablecoin. It is an almost exact copy of the Terra stablecoin. USD Tron relies on its own Tron TRX cryptocurrency to maintain the binding, Terra also worked with LUNA.

After its Tron launch on May 5, 2022, its market capitalization exceeded $550 million. It isn’t worth anything that such a result was achieved in just a few weeks. By comparison, in November 2020 Terra was able to earn only $150 million in the first month of operation.

In the midst of the collapse of Terra, investors pay attention to the new stablecoin, which suggests that the market does not distrust all stablecoins. Perhaps this is due to the specifics of their work and special failure protection mechanisms. For example, the creator of Tron, Justin Sun stated that:

“The reserve backing we’re using right now is highly diversified. It includes bitcoin and all different kinds of stablecoin. USDC [Circle’s stablecoin] will be a part of our reserve, but it will only be a small part of our reserve,”

He also drew attention to the transparency of the company’s actions, which ,according to him, can strengthen investor confidence:

“All the Bitcoin addresses will be signed by signature so everybody will know those bitcoins belong to us,”.

But there is another opinion. For example, The Verge released its investigation a year ago, which indicates that Justin Sun is a controversial figure.

“More audacious than his reputation, Sun has an even riskier approach to U.S. and Chinese financial regulations — and is often trying to evade them,” — writes TheVerge .

Despite the fact that investigations are currently underway in South Korea and the creator of Terra, Do Kwon, is being held accountable, investors are expected to transfer money to the Tron, that is led by a person that already been accused of violating of the law.

Аt the same time, we are observing further shrinking of the markets and as Warren Buffett once put: “…[we] will see who is swimming naked”. By May 17, at the height of the Terra crisis, investors had withdrawn more than $7 billion from the Tether stablecoin. Crypto lender Celsius pauses withdrawals due to ‘extreme market conditions’ Crypto lender Celsius said it is pausing all account withdrawals and transfers, citing “extreme market conditions.” The firm had more than $8 billion lent out to clients and almost $12 billion in assets under management as of May. We continue to observe.