Terra’s Collapse Helps Tron Become Third-Largest DeFi Blockchain Network

UTC by Bhushan Akolkar · 3 min read
Terra’s Collapse Helps Tron Become Third-Largest DeFi Blockchain Network
Photo: Shutterstock

While all other networks have lost the DeFi market share, Tron’s DeFi TVL has jumped 45% over the last amind the market crash.

On Monday, May 30, Tron blockchain attained a major milestone of becoming the third-largest DeFi network in terms of total-value-locked (TVL). As per data on DeFi Llama, the total value locked on the Tron blockchain is currently $5.99 billion.

Tron: Third-Largest DeFi Blockchain

With this, Tron is just behind Ethereum (ETH) and Binance Smart Chain (BSC) in DeFi TVL. The recent collapse of the Terra ecosystem has translated into a success story for Tron. Just before the Terra LUNA fallout, Tron’s TVL stood at $3.97 billion ranking fifth among other networks.

However, with the Terra ecosystem collapse, Tron’s DeFi TVL has jumped 45% over the last month. Over the last week, the DeFi TVL on Tron has surged by nearly 14%. Interestingly, Tron is also the only blockchain to have continued growth across all major sectors. On the other hand, competing blockchains Ethereum, Solana, Polygon, BNB Chain, Avalanche, and Fantom have shed double-digits over the past month.

Justlend (JST) application is one of the biggest contributors to DeFi TVL on the Tron blockchain. It alone contributes nearly 50% or $2.86 billion in terms of DeFi TVL. Interestingly, $1.08 billion was added to Justlend just after May 21. There’s been a 58% surge in the protocols DeFi TVL over the last month.

Justlend is similar to Anchor on the Terra blockchain. The USDD deposits on Justlend contribute more than 22% in Annual Percentage Yield (APY) as of writing.

The other notable contributors to the Tron blockchain network as JustStables (USDJ) and SUNSwap (SUN).

Growing Criticism for Tron’s USDD Stablecoin

Although the Tron network is currently enjoying the surge in DeFi TVL, there have been growing concerns about its USDD stablecoin. The criticism around the USDD stablecoin is growing with some saying that it could be just another failed project like the UST.

However, data scientist Bennett Tomlin said that, unlike the UST, the USDD is not an algorithmic stablecoin. In his recent tweet, Tomlin added:

“As far as I can tell $USDD is not an algorithmic stablecoin. The only interaction that the TRD members can do is to burn TRX to get USDD. I see no contract to go the other way, and no algorithm adjusting either mechanism, except that minting depends on oracle price of TRX. Like nominally the algorithm in Terra was the mechanism which refilled the AMM in the market module (they lied about this a bunch). This doesn’t seem to have an algorithm at all!”

Recently, Ethereum co-founder Vitalik Buterin warned of DeFi projects offering 20% and more APY saying that they are too unrealistic in today’s world.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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