It’s time to build a decentralized reserve dedicated to the blockchain industry.
The blockchain space is undergoing a laissez-faire market economy similar to that of the Gilded Age in the U.S. when it was the world’s only great power that did not have a central bank in the beginning of the 20th century. In the end, it was buffeted by the Panic of 1907. The financial crisis offset the industrial progress achieved by the U.S. in the 19th century, confronting the country with the necessity of a central bank’s macro-control and protection for the development of the industry. For this reason, President Woodrow Wilson signed the Federal Reserve Act on December 23, 1913.
We’re aware that a decentralized reserve is also needed for the further growth of the blockchain industry. In such an open market, herding, with no constraint from macroprudential regulation, will only damage every crypto stakeholder’s interests. The blockchain world has witnessed numerous market crashes, not to mention the lamentable bear markets from 2014 to 2017 and from 2018 to 2020. Many crypto investors suffered a massive blow due to the lack of market guidance and liquidity protection from a dedicated reserve. Today, blockchain has grown into an open financial market of more than a trillion dollars, and we believe the time has come for a decentralized reserve.
As an individual crypto investor, I helped inject a flood of liquidity as a countermeasure against some of the most dramatic market crashes on September 4, 2017, March 12, 2020, and May 12, 2021, with an aim to contribute to the market stability by purchasing cryptos worth over $3 billion. However, it’s clear that individual contributions cannot rival the collective power of a decentralized organization. By setting up a decentralized blockchain reserve, we will be able to bring together the power of all blockchain practitioners through a DAO system and build this organization into the firmest protector of the blockchain industry and market. I believe this will be the best solution to any future crises.
Four years into its inception, the TRON blockchain has grown into the world’s largest stablecoin network. The circulating supply of TRC-20 USDT has exceeded that of ERC-20 USDT, standing at $41 billion. The TRON network boasts over $55 billion worth of financial assets, including on-chain stablecoins, and has settled and cleared total financial assets of over $4 trillion. It is now taking a step further to found the TRON DAO Reserve, the blockchain industry’s first decentralized reserve.
The TRON DAO Reserve aims to safeguard the overall blockchain industry and crypto market, prevent panic trading caused by financial crises, and mitigate severe and long-term economic downturns. The TRON DAO Reserve will be able to stabilize the exchange rates of centralized and decentralized stablecoins on TRON and other blockchains by setting risk-free interest rates and regulating the market through liquidity provision.
It also intends to formulate and implement monetary and exchange rate policies, play the role of a lender of last resort, and maintain reserve assets of various blockchains or blockchain-powered financial institutions to minimize systemic risks and ensure the stability of the financial market.
The TRON DAO Reserve will raise $10 billion in early-stage reserves from prominent blockchain industry players, effectuating deposits over six to twelve months. Concurrently, it will continue to attract more liquid assets and whitelist more compliant institutions on board as stakeholders to better serve its role as a decentralized organization.
As the early custodian, the TRON DAO Reserve will manage the permissions of USDD, ensuring price stability and decentralization by collateralizing USDD with its reserves. It will also have a built-in incentive mechanism and a responsive monetary policy, which will allow USDD to self-stabilize against any price fluctuations.
Over time, the TRON DAO Reserve will work towards consolidating the value of USDD as a true settlement currency.
Justin Sun
April 21, 2022