The Tron ecosystem joins the DeFi podium
According to data from the DefiLlama website, tron (TRX) is now the third largest decentralized finance (DeFi) blockchain by total value locked (TVL). This TVL is currently around $ 6 billion and has increased by 50% within one month.
USDD, the new algorithmic stablecoin in the ecosystem, is no stranger to this growth. Indeed, it is possible to generate more than 20% yield with this, putting it as a guarantee of the JustLend protocol.
JustLend is the main application of this ecosystem and allows for loans and loans the via dell’Aave (AAVE). Furthermore, the protocol alone capitalizes 50% of Tron’s TVL in DeFi.
👉 To go further – Find our Tron (TRX) blockchain guide
Like a sense of deja vu
An algorithmic stablecoin and 20% yields obviously remind us of the defunct UST on the Terra (LUNA) blockchain with the Anchor protocol. Furthermore, these returns are mainly generated by liquidity extractionor financial incentives to let us deposit our liquidity:
Returns offered on JustLend
As shown in the illustration above, while the USDD arrangement is for the purpose of offering only annual yield of 3.31%., the additional incentives bring them to 23.54%. We can therefore legitimately ask what will happen when these incentives tend to diminish, as they did on Anchor, some time before the collapse of the Earth.
Furthermore, there is no guarantee that the USDD would be stronger than the FSO in the event of a loss of the peg, as its operation also involves a very similar arbitration system. An arbitration that had failed to play his role in the face of speculation during the fall of the FSO.
However, it is interesting to note that investors appear to hold on a cautious approach for the moment. In fact, of the $ 3.2 billion deposited on JustLend, the borrowed amounts represent only 10% of that sum, which implies measured risk taking.
A totally limited ecosystem in its offer
If it is possible to compare the USDD risks with the FSO, however, it is necessary to put it into perspective. Tron’s blockchain is definitely 3ᵉ, but it’s TVL it is 5 times lower than that experienced by Earth on the highs of April. For its part, Ethereum (ETH) remains well ahead with 72 billion dollars.
Also according to DefiLlama, the ecosystem founded by Justin Sun has only 8 different applications and the current performance they do not bode well for long-term sustainabilityespecially given the current market situation.
It is also worth mentioning that the USDD was created, which gave renewed interest to this blockchain browsing on the popularity of the FSO at its peak. We therefore hope that it will not suffer the same fate. Because even if the systemic consequences would probably not be as pronounced, authorities around the world would not fail to give another example in their normative discourse.
👉 Also in the news – Tether launches a new stablecoin based on the Mexican peso: the MXNT
Source: DefiLlama, Image: JustLend
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About the author: Vincenzo Mayor
I timidly discovered the world of blockchain in late 2018 during my pursuit of financial freedom. Initially invested moderately, only two years later I decided to bet everything on the movement that was taking shape at the time. So I dedicate 2021 to train better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I know, I want to share it with you.
All articles by Vincent Maire.