The Tron ecosystem will not abandon the algorithmic stablecoin USDD despite the collapse of UST and LUNA. In a conversation with CoinDesk, project founder Justin Sun said that the Terraform Labs product was doomed by too rapid growth and a lack of sufficient funds in the reserve fund.

“I still believe in algorithmic stablecoins. The crypto industry will thrive and these assets should be there. We just need more complex and well planned structures. We think about things like leverage, growth and risk,” he wrote.

According to him, the Terra ecosystem did not collapse because the algorithmic concept of stablecoins did not apply. He explained that LUNA is heavily leveraged and has achieved an “impressive market cap” very quickly.

“During the development of USDD, we focused on the healthy growth of the instrument. We want to keep the market cap relatively small compared to TRX and the overall market cap. At the same time, it should be less than the reserves of the Tron DAO,” Sun said.

In May, TRON DAO Reserve started buying BTC and TRX to support USDD. san said DAO also bought the “classic” stablecoins USDT, USDC and TUSD. According to him, having these assets in the organization’s basket will quickly provide the liquidity necessary for USDD stability in a volatile market.

“We have stablecoins that can be distributed immediately if something bad happens. This will help us save time and then we can gradually liquidate other assets if needed. LUNA was growing so fast, they didn’t have time to set up a good reserve fund to stabilize the market,” Sun explained.

The founder of Tron also stressed that he had nothing to do with the destabilization of the UST. According to him, it was not an “organized attack” but a general market panic.

Sun noted that as the UST rises, the Terra team needs to lower the rate of return of the Anchor protocol. The stablecoin USDD offers a 30% return, but this figure will be lower in the future.

“It’s actually a marketing strategy, right? You’re attracting users to participate in the growth of stablecoin. I think profitability should depend on the growth of the product,” he said.

Earlier, Sun committed $2 billion through TRON DAO Reserve to prevent USDD from pegging to the US dollar as in the UST.

Recall that the launch of the algorithmic stablecoin on the Tron network took place in early May 2022.