A closer look at the DeFi sectors newest player
With DeFi exploding all over Ethereum, there’s also a rush from other smart contract blockchains to get in on the action.
And that’s certainly the case for TRON, which following the launch of its Uniswap-inspired AMM JustSwap has also launched its MakerDAO-inspired JUST dapp.
As with MakerDAO, JUST is all about locking collateral into a smart contract and using its value to mint a stablecoin as a loan.
For MakerDAO, users lock-in ETH (or various other ERC20 tokens) to mint DAI, while in JUST users only have the option to lock in TRON’s native token TRX, in return, minting dollar stablecoin USDJ.
Also, as with MakerDAO, users have to maintain a liquidation ratio of at least 150%.
This means if you lock in $150-worth of TRX, you can mint up to 100 USDJ (or $100-worth) of stablecoins as a loan.
However, the closer your loan’s liquidation ratio is to 150%, the more vulnerable it will be to the price of TRX dropping, meaning that you either have to add more TRX collateral or your loan will be forcibly liquidated, including a penalty fee of 13%.
Assuming the price of TRX doesn’t change in such a way to cause liquidation, users eventually will have to pay back their loan, using UDSJ for the principal and the JST token which – like MKR in MakerDAO – is required to pay the interest due. JST is also used to control JUST’s governance and maintain the dollar peg for USDJ.
As ever, remember all dapps are experimental, so never put more value in such dapps than you are comfortable with losing.