TRON DAO Reserve introduced today their newest monetary policy tool called the PSM or Peg Stability Module which is used for stablecoin swaps.
🤩 Introducing our new Peg Stability Module (PSM)!
— TRON DAO Reserve (@trondaoreserve) August 3, 2022
The PSM would allow users to swap USDD and USDT at a 1:1 ratio and provide a more stable and competitive price with no sudden slippages or hidden fees.
The latest arbitrage mechanism would keep the Decentralized USD peg close to 1 US dollar during times when the demand for USDD outstrips USDD supply.
PSM assures users of price stability of USDD through a stable peg and as mentioned in their document:
“PSM Governance is mainly accomplished by adjusting the parameters of the smart contract. In extreme market conditions, PSM can adjust the corresponding parameters of the smart contract according to the real-time market conditions to deal with the extreme challenge from the market, protect the asset safety of investors and users, and maintain the market stability.”
PSM portals would be available on the websites of USDD, TRON DAO Reserve, and SUN.IO.
What is USDD?
USDD or the Decentralized USD is one of the recent stablecoins launched on the TRON blockchain and it is an algorithmic stablecoin that would be issued as a TRC token on the TRON network.
🤔The Peg-Stability Module was officially launched, but what is it exactly?
— USDD (@usddio) August 3, 2022
It will leverage the power of mathematics and algorithms to achieve the overarching goal of financial freedom for all. This is similar to the other algorithmic stablecoins such as TerraUSD (UST) and Frax Finance (FRAX).
The recently established TRON DAO Reserve would serve as a transparent mechanism to fully manage the reserves backing the USDD.
As explained in the open letter to the community:
When the USDD’s price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX and when the USDD’s price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD.
The Decentralized USD algorithm will ensure that the newest stablecoin on the TRON blockchain maintains its US dollar peg regardless of the market conditions.
USDD will also be available on Ethereum and BNB Chain through the BTTC cross-chain protocol.
What is TRON DAO Reserve?
TRON DAO Reserve is a DAO system organized in a decentralized manner. It aims to safeguard the overall blockchain industry and crypto market, prevent panic trading caused by financial crises, and mitigate severe economic downturns.
It oversees the TRON-based stablecoins in the ecosystem and manages the Decentralized USD (USDD) on TRON as its early custodian and ensures its price stability with reserves.
Were you able to try the Peg Stability Module stablecoin swap tool by the TRON DAO Reserve? Let us know in the comments section below.
For more news and updates, see Tron Spark.