Tron’s (TRX) TVL has gone up to over $6 billion in the last 30 days, almost reaching BNB Chain TVL with $8.8 billion.
The blockchain of Tron is presently the 3rd largest network in terms of Total Value Locked (TVL) among protocols for decentralized finance (DeFi). Ethereum with $71.3 billion TVL, being the first and BNB Chain with $8.8 billion, being the second. Interestingly, this happened after a month of launching its algorithmic stablecoin, USSD, which was on May 5th. The TVL rise was seen by Justlend protocol, an application that’s similar to Anchor Protocol as it offers more APY for USDD deposits.
The rise of TRon’s TVL was identified by CoinGecko.
“Total value locked (TVL) in #TRON soars to $6B, surpassing the likes of Avalanche, Solana, and Polygon chain.
This is partially due to the growth of its algorithmic stablecoin $USDD, which recently crossed the $600M market cap” Said CoinGecko
Amid the leadership of Tron ahead of other networks TVL like Sol, Polygon, and so on. Many believe the similarities between Tron’s USDD and Terra’s UST which went down last month are evident as both are algorithmic stablecoins relying on market arbitrage to maintain their value, and that Tron’s USDD might be doomed to fail just like Terra’s UST.
Even Data scientist Bennett Tomlin went ahead and said USDD is not an algorithmic fiat-pegged token concept.
“As far as I can tell USDD is not an algorithmic stablecoin, The only interaction that the USDD members can do is to burn”‘ Said Bennett Tomlin.
Although, before Terra’s UST collapse, the stablecoin already crossed a market cap of over $30 billion. That aside, Tron-based protocols offer a similar significant return to that of the Anchor protocol offered on Terra’s ecosystem. Justlend offers an APY of 23%, far more than that of Anchor which is 19.5%.
Another protocol, called SunSwap, offers users an APR of up to 64% when they stake Tron’s USDD liquidity tokens. This percentage of profit has drawn a lot of users to these protocols. JustLend TVL has also gone from $1.79 billion on May 1st to $2.98 billion on June 1. There have been some critics that say USDD might eventually fail like Terra’s UST did, and also some say Tron’s USDD doesn’t even qualify to be an algorithmic token.
Tron’s native Token TRX value has also gone up in a duo with the TVL. According to Justin Sun in a blog post, USDD is said to always be over collateralized by other low volatile assets like Tether’s USDT, USDC, and other digital assets.
Justin Sun still according to the post, continued to state that USDD’s supply would be sustained in phases. In the first phase, stakers of the Tron’s USDD will receive a 30% APR that would be capped at 2 billion USDD. The second phase will be about those who have locked their USDD liquidity for at least a year, they would continue to receive higher APR, while those who choose to lock their USDD for a shorter period would receive lower rates of APR.
And finally, he concluded that USDD might just be starting and that it would expand to all other blockchain networks as the industry grows more in the future. Currently, USDD is only available in the Tron, BNB, and Ethereum network.
