Try Quests to earn cryptoHow Relevant is Justin Sun?
Justin Sun has recently announced an algorithmic stablecoin, USDD, with 30% yield. Sun has announced plans to backstop USDD with $10B of crypto as collateral, matching the Luna Foundation Guard (LFG). Do a deep dive, conduct research, and provide a well-researched conclusion to the burning questions: is Justin Sun for real? Is USDD likely to accrue significant backing? How will its 30% offering fare over time?
Justin Sun is a tech and crypto entrepreneur who often gets a bad reputation. He is known for dodging political repurcussions (leaving China to offer ICO, knowing ICO's were illegal), schemes for insider trading, and more. He is best known for creating the crypto platform TRON and being the CEO of BitTorrent.
Currently with ~$6.8 Billion in market cap, TRON is a blockchain ecosystem with the native token TRX. TRON originally was an ETH-Based ECR-20 token; however, in 2018 it switched its protocol to an individual blockchain.
However, just with the shadow that follows Justin Sun, TRON received some criticism on its technology. TRON originally didn't boast any new technological advances against any other chain; moreover, many felt it took too many ideas from ETH: decentralized applications, smart contracts, etc. Some felt they went too far with borrowing ideas from other main chains -- they even received some accusations of copying pieces of their white paper from other sources.
Despite this, TRON has some definitive upsides such as free transactions on the chain up to a certain point. Every user gets 5,000 free bandwidth points per day -- with one bandwidth point being equal to 1 byte of data. If a user runs out of bandwidth points, 0.1 TRX is burned per byte of data. Due to the free nature of transactions, TRON has seen high transaction volumes across its chain.
USDD is a TRON issued algorithmic stable coin that is designed to mimic Terra's USDT. They promote taking advantage of arbitrage opportunities to maintain the 1$ peg, while also holding a $10 Billion reserve in case of emergency. The USDD is managed by TRON DAO - which boasts a 30% return for holding the USDD in their reserve.
Due to the nature of USDD and TRX mimicking the behavior of UST and LUNA, lets analyze the two together and see how the two compare.
Currently, according to coinmarketcap, we see the Total supply of UST to be 11.3B and a Market Cap of 1.3B. For LUNA, there is a total supply of 6.5T and a Market Cap of 1.3B.
Everything appeared to be on the rise for LUNA & UST until the ultimate crash in early to mid May.
When looking at the USDD chart on coinmarketcap, we can see that price of USDD seems fairly volitile, with two major deviations from the 1$ peg: the first 5 days of the program, and May 11 and 12.
Currently, there does not appear to be 30% staking rewards for USDD. Elipsis Finance (top listed dex for USDD) is only offering 3.3% base and a bonus 13.4% for USDD until Wednesday March 18 -- when the bonus will expire.
Moreover, the white paper for USDD states that the 30% rate won't actually take affect until the full reserve of $10 Billion is met.
Given the current situation with Terra, I think this proposal for USDD is doubtful.
I think at the start of the project, Terra was a thriving eco-system and Justin Sun wanted in. He has accusations of borrowing too many ideas from other chains to build his TRON chain, he modeled his USDD after the Terra community, and he wanted to steal users by offering more staking rewards.
Now that Terra has crashed i think the community is a little hesitant about another algo coin -- especially one that has the same setup as Terra (stable coin that has a 1 to 1 burn/mint ratio with the base coin and $10 Billion in reserves). Not only that, they are offering a 30% staking reward which seems even more unsustainable after the Terra collapse.