TRON, a popular blockchain platform and decentralized content ecosystem have just announced its move into the world of decentralized finance (DeFi), with the launch of JUST – a decentralized lending platform with its associated stablecoin, USDJ.
JUST and USDJ are Now Live
TRON’s first DeFi project is JUST, a new platform that allows TRX holders to receive a new stablecoin called USDJ in return for locking up TRX in a collateralized debt position, or CDP.
Like Tether (USDT), TRON’s new USDJ token is pegged to the value of the US dollar (USD). However, it differs in that it is instead collateralized with a digital asset – in this case, TRX coins. Tether, on the other hand, is collateralized by USD bank deposits.
Since USDJ does not require users to make a bank deposit, USDJ can be issued immediately after the TRX is received, making the stablecoin minting process far quicker than most competing platforms.
🤔Still wondering how to generate USDJ on JUST?
🤩Below is the simplest explanation in one picture!
— JUST (@DeFi_JUST) April 22, 2020
To get their hands on USDJ, users need to interact with the JUST smart contract through the new dApp, and stake an amount of TRX that exceeds the value of USDJ they wish to receive. After forming a collateralized debt position (CDP), users automatically receive USDJ, which they are then free to spend, transfer, or exchange just like most other regular cryptocurrencies. JUST currently keeps the collateralization at above 300%, ensure the network is adequately protected against even extreme volatility.
When the user wants their TRX back, they simply close their collateralized debt position by repaying the USDJ they receive in addition to a supplement known as the “stability fee,” which is also paid in USDJ.
This stability fee is generated as a reward for those that participate in the governance of the platform by holding a second type of token called JUST (JST) and voting.
Why Are Stablecoins Popular?
Although stablecoins are primarily used by traders to exit volatility while the market is temporarily down (hedging), they also serve as a critical middle-ground between the traditional economy like banks, fiat currency, and payment processing platforms, and the new digital economy. In short, they allow holders to transfer funds in a way they are more accustomed to.
Currently, the vast majority of stablecoins, including TRON’s new USDJ offering, are pegged to the US dollar. However, the last year has also seen the proliferation of stablecoins pegged to other assets, including the Euro (EUR₮) and Gold (XAU₮) – the latter of which is also available as a TRC-20 token.
Stablecoins are also frequently used for everyday cryptocurrency purchases and peer-to-peer payments since online merchants and counterparties are much less subject to volatility when accepting payments in stablecoins.
Likewise, stablecoins represent a strong alternative to traditional remittance services, allowing users to make global transfers at a fraction of the cost in just minutes and thereby overcoming two of the significant limitations of money remittance platforms – speed and cost.
This range of unique use cases has seen stablecoins explode in popularity in recent years, with Tether now occupying the position of fourth-largest cryptocurrency by market capitalization.
Although most stablecoin transfers are currently executed on the Ethereum blockchain, Tron’s recent momentum in the space could see its offerings quickly rise to become a prominent alternative to ERC20-based stablecoins. Could JUST and USDJ be the right tools for the job? Only time will tell.