Tron Now Commands the Third-Largest TVL in Defi — Network's Stablecoin USDD Confronted by Skepticism

This week the Tron blockchain has become the third-largest network in terms of total value locked (TVL) in decentralized finance (defi) protocols. Interestingly, 48.19% of the TVL is held by the defi protocol Justlend, an application that’s similar to Anchor Protocol as it offers more than 20% APY for USDD deposits. Amid Tron’s TVL rising, the network’s stablecoin USDD has been confronted by skeptics over the similarities USDD holds with Terra’s UST.

Tron Takes the Third-Largest Position in Terms of Total Value Locked in Decentralized Finance Protocols

On May 30, 2022, Tron managed to become the third-largest defi blockchain in terms of total value locked. At the time of writing, Tron’s TVL in defi is $5.94 billion, which is just below the Binance Smart Chain (BSC) TVL and above the Avalanche (AVAX) TVL.

Amid the Terra LUNA and UST fallout, on May 12, 2022, Tron’s TVL was $3.97 billion and the blockchain was ranked number five in terms of TVL size by chains. On that day, Tron’s TVL was down 16.16% lower than it was on May 5, but after the Terra fiasco subsided, Tron claimed the third position in terms of TVL in defi.

This month, Tron’s defi TVL increased 45.22% and over the last seven days, as it has risen by 13.73%. Tron’s TVL is dominated by a defi protocol called Justlend, as 48.19% of Tron’s aggregate held in defi is hosted on the Justlend application. Justlend has $2.86 billion total value locked and it has increased a great deal since May 21.

$1.08 billion was added to Justlend since May 21, as the protocol’s TVL increased by 58% since then. Furthermore, Justlend was audited by the blockchain security company Certik. Similar to Anchor, USDD deposits on Justlend offer 23.55% APY at the time of writing.

Other notable defi applications on Tron, in terms of TVL balances, include Juststables and Sunswap. Juststables has a TVL balance of $1.41 billion and Sunswap has just under a billion in total value locked. USDD has also managed to become the ninth-largest stablecoin among all the fiat-pegged tokens in existence.

The Tron stablecoin’s market valuation today is $603 million and it has seen $179.6 million in 24-hour global trade volume. Statistics from Cryptocompare indicate that USDT and USDC are USDD’s top two trading pairs. Tron’s new algorithmic stablecoin USDD and the APY on Justlend is arguably eerily similar to the products once offered by Do Kwon, Terraform Labs (TFL), and Anchor team.

Tron’s USDD Stablecoin Faces Numerous Critics and Skeptics

A number of critics have said “USDD is doomed to fail,” and there’s a litany of criticism about the project being so similar to UST. Data scientist Bennett Tomlin has gone as far to say that USDD is not an algorithmic fiat-pegged token concept.

“As far as I can tell USDD is not an algorithmic stablecoin,” Tomlin said. “The only interaction that the TRD members can do is to burn TRX to get USDD. I see no contract to go the other way, and no algorithm adjusting either mechanism, except that minting depends on oracle price of TRX.” Tomlin added:

Like nominally the algorithm in Terra was the mechanism which refilled the AMM in the market module (they lied about this a bunch). This doesn’t seem to have an algorithm at all.

Despite the criticism and speculation, Tron has managed to be a top contender in the world of decentralized finance. Furthermore, Tron’s native token tron (TRX) has managed to climb to the 14th position in terms of the largest market caps in the crypto economy.

This is because while bitcoin (BTC), ethereum (ETH), and many others printed weekly losses for nine weeks in a row, Tron managed to stave off most of the market carnage. TRX is up 14.7% during the last two weeks and 30.5% against the U.S. dollar over the last month.