Key Insights:
TRX sees a huge price gain after its USDD 2.0 stablecoin launch.
USDD 2.0 offers a 20% APY for its buyers, completely subsidized by Tron DAO.
Stablecoins are highly demanded from exchanges, DEXs, liquidity protocols, and on-ramp services in bull markets.
We could see TRX recover above $0.44, its ATH in Q1 2025.
Tron has launched a new USDD 2.0 stablecoin, which acts as a revamped version of its earlier USDD stablecoin but will be algorithmic. Justin Sun's announcement of offering 20% APY has sparked a rally in TRX. The Tron DAO will completely subsidize the yield.
Unlike TUSD, USDD is a hybrid stablecoin with over 300% collateralization and a lesser risk of being de-pegged, which we expect will remain the same for USDD 2.0.
Users willing to buy USDD 2.0 must first need some TRX to swap them on any Tron-based DeFi protocol or DEX. This aspect contributes to TRX's rally.
Another factor pushing TRX higher is that each USDD transaction would need some TRX for gas, contributing to the latter's demand.
At present, Tron is the second largest blockchain in terms of stablecoin volumes and rivals Ethereum. Its on-chain presence of $60 billion worth of stablecoins (mostly USDT) is just below Ethereum's ($115 billion) and way higher than that of its next competitor, BNB Chain ($7 billion).
Top 5 Blockchains According to On-Chain Stablecoin Volumes
DeFi Llama
A subsized program could only be successful if TronDAO has enough assets to back the program in the long run. Otherwise, there is a high chance of it meeting the same fate as TUSD.
TRX has been an underperformer in the last week, with just a 1.8% gain over the period compared to Ripple's 45%.
Last month, it saw corrections from an all-time high of $0.44 but was unable to recover in a way that other cryptos, like Ethereum, did.
TRX Price Trends in 2024 and Early 2025
CoinMarketCap
However, the gains have accelerated in the last 24 hours, with TRX gaining 5%. Further, given the expected rise of USDD 2.0, we might see TRX rise above $0.3. In the near term, i.e., within Q1 2025, we might see TRX recover above its ATH of $0.44.
Stablecoins are in demand from exchanges, DeFi protocols, liquidity pools, and other on-ramp and off-ramp services. Their fixed value plays a major role in crypto markets.
Exchanges have the highest need for stablecoins due to their role in bringing market liquidity into those exchanges. Any crypto investor in a major exchange either first buys stablecoins and redeems that crypto with stablecoins when they want to exit those investments.
DeFi protocols and liquidity pools need stablecoins to lend to projects like DEXs which need them to facilitate the easy buying and selling of crypto in their exchanges. Their requirement is similar to CEXs, but decentralized exchanges see more revenue due to their lack of a KYC policy.
On-ramp and off-ramp services use stablecoins to help users buy crypto and redeem their fiat currency when they sell it. The majority of customers on these platforms are crypto market professionals, such as developers, marketing associates, and even project founders. Stablecoins act as a fast way of paying salaries, getting funded by VCs, paying for services, paying freelancers, and doing similar transactions.
This high demand translates into higher interest for users who are able to provide them. Consequently, platforms like Tron are able to provide high APY rates.
However, these APY rates are based on market demand and are not constant. The reason why current markets are offering high APY for stablecoins is because of the ongoing market rallies that attract new users to exchanges, DeFi protocols, and on-ramps.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.