Tron, a major update to the algorithmic stablecoin Decentralized USD (or USDD) has been implemented just a month following its launch. It was effective as of June 5, 2017. The measure was carried out in order to safeguard Tron’s stablecoin from the fatal tragedy that befell , while also making USDD the world’s first over-collateralized, decentralized stablecoin.

Over-collateralization means the USDD algorithmic stabilitycoin can be backed by both volatile and stable assets.

The algorithmic stablecoin, which was previously tied to the United States Dollar, was dependent upon a smart contract algorithm, which tracks supply and demand and adjusts in accordance.

The #USDD is now officially the #first #decentralized over-collateralized #StableCoin Currently collateralized at over 200% with a guaranteed minimum collateral ratio of 130%!USDD will lead the way into a new era for #stablecoins as it grows.https://t.co/a692Pb20Tt

— USDD (@usddio) June 5, 2022

With regards to its working model, Tron’s stablecoin was widely labeled as being an exact copy of Terra’s UST. Tron DAO Reserve assets (TDR), have now been partially secured by USDD after the upgrade.

The latter, as stated above, has increased its liquid assets holdings and now possesses 240million USDT stablecoins and 10.5K Bitcoins and 1.9Billion TRX. More than 8.29 billion TRX have already been put in the burning contract.

USDD stablecoin has a market cap of $667 million. It is believed to have a higher collateral ratio than 130%. This exceeds the mandatory 120% ratio for a DAO. The stablecoin’s collateralization ratio currently sits at higher than 226% at the time of writing.

Justin Sun, Tron founder has stated that USDD provides the best collateral ratio anywhere in the world. In his interview with Bloomberg, he also remarked that the USDD’s over-collateralization had long been in Tron’s plans, “but Terra/Luna definitely accelerated and prioritized this for our team.”

Algorithmic stabilitycoins came under scrutiny following the TerraUSD (UST) loss of its 1:1 peg with the United States Dollar early in May. It crashed and lost nearly 99%, causing considerable chaos in the border cryptocurrency marketplace.

Terra’s stablecoin was not backed by any fiat currency or commodity, and relied solely on an algorithm linked to the supply of Terra’s governance coin LUNA to maintain a value of $1. Both TerraUSD and LUNA plunged to the ground after panicked investors withdrew large amounts of their holdings.

Warnings from the crypto sphere about algorithmic stablecoins not being sustainable and having little future led to TerraUSD’s failure. Global governments took notice and now urge their legislators to provide a legal framework for regulation of stablecoins. The Economic Secretary of the United Kingdom had announced in January that stablecoins would come under formal payments regulation.

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