Tron actively burns coins as the network’s supporters expect a greater burn rate with the release of USDD
The project was born in 2018, when the cryptocurrency market was something very different from what we see today. Tron always follows new trends and reports daily on the amounts of coins withdrawn from circulation via burning mechanism.
As the official Tron community account reports, the network has burned over 125 million coins as issuing TRX stays at negative 120 million, valued at approximately $10 million.
As USDD Stablecoin by Tron Network was introduced, the blockchain now expects a higher burn rate thanks to the arbitrary exchange mechanism at the heart of the stablecoin, which mostly mimics Terra’s UST holding scheme.
With the mint of each USDD, $1 worth of TRX is getting burned, which expands the supply of USDD. With an expanding and decreasing supply, Tron is able to control the price of the stablecoin at $1.
Can this mechanism be reliable?
Terra’s stablecoin UST ran smoothly in the market until Bitcoin’s drop below $35,000 caused panic in the cryptocurrency market and increased UST outflows on Anchor .
With a massive drop in exit liquidity, UST lost its peg for a moment, causing the price of the stablecoin to drop below $1, which is now questioning the reliability of an entire mechanism that relies on the core of USDD stablecoin.
Alternatively, the scheme should positively affect TRX’s performance in the cryptocurrency market. The coin has mostly followed general industry trends and has lost around 50% of its value since November 2021.
Following the release of USDD, TRX rallied by more than 30% and now trades at $0.08.
