USDD stablecoin is an algorithmic stablecoin that runs on TRON, a multipurpose smart contract blockchain, BNB Chain, and Ethereum. The stablecoin is pegged to the US dollar in a 1:1 ratio. TRON DAO Reserve chose to peg USDD’s price to the US dollar because it is the most widely used fiat currency globally.
By maintaining its peg to the US dollar, USDD’s price remains stable at all times, helping the stablecoin address the volatility problem in cryptocurrencies.
However, maintaining USDD’s peg to the US dollar needs collateral. To solve this puzzle, TRON DAO Reserve leverages TRON’s native token, TRX, as the base currency for USDD. Additionally, the DAO added the backing of high-liquidity cryptocurrencies like BTC and Tether (USDT).
This setup helps ensure the over-collateralization of USDD because the value of the collateralized assets consistently remains higher than the amount of USDD in circulation. The stablecoin currently boasts an over-collateralization ratio of over 200%.
Moreover, USDD leverages responsive monetary policy mechanisms that allow the overcollateralization ratio to adjust dynamically and maintain stability even as the values of reserve assets fluctuate.
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Where does USDD stablecoin come from?
The person behind USDD is Justin Sun. Since graduating with a BA in History from Peking University and an MA in Political Economy from the University of Pennsylvania, Sun has made quite a name for himself. Before USDD he was primarily known as the founder of the TRON network back in 2017. Tron is a cryptocurrency that provides users with decentralized peer-to-peer content and entertainment-sharing ecosystem.
The organization that issued USDD is TRON DAO Reserve. It’s a decentralized autonomous organization created by the TRON Network. The stated goals of the DAO are to overall protect the crypto market, prevent panic trading, and minimize severe economic downturns. The organization also oversees TRON-based stablecoins and ensures their price stability.
How Does USDD Work?
USDD in the secondary market relies on a decentralized price oracle to estimate accurate prices. The mechanisms behind the price oracle involve Super Representatives (SRs) voting on what they believe to be the current exchange rate in USD and providing the USDD price oracle on the TRON network.
The voting process involves tallying votes on each block and taking the weighted medians as the true rates. SRs that vote within the standard deviation of the chosen median get rewards. These rewards seek to incentivize accurate voting among SRs.
However, the incentivization model introduces another challenge because SRs can team up and vote on a false rate. To address this problem, TRON DAO Reserve limits voting to people deeply vested in the USDD ecosystem.
Additionally, the system punishes SRs that fail to submit their votes before the voting ends or those that vote outside the standard deviation of the chosen median.
SR rewards come from income that TRON gets from stablecoin swaps and TRX-stablecoin swaps. Specifically, the funds come from Tobin Tax and Spreading Fee. Tobin Tax is the fixed rate for stablecoin swaps within the TRON ecosystem. On the other hand, swapping USDD to TRX carries a 0.5% spreading fee.
USDD also incorporates a Peg Stability Module (PSM), a pivotal tool launched by the TRON DAO Reserve. The PSM serves as an efficient swap mechanism that aids in maintaining USDD’s peg to the US dollar. Users can seamlessly swap USDD for other stablecoins at a 1:1 ratio without experiencing slippage, ensuring that USDD consistently retains its value. This feature enhances USDD’s usability, as users can confidently exchange their stable assets with minimal friction, promoting its adoption and utility within the broader cryptocurrency ecosystem.
Who Created USDD?
The person behind USDD crypto, Chinese entrepreneur Justin Sun, is also TRON Network’s founder. TRON was created in 2017 in China, and the TRON token’s Initial Coin Offering there took place shortly before the country banned ICOs. After creating this blockchain, Sun also started USDD.
Since graduating with a BA in History from Peking University and an MA in Political Economy from the University of Pennsylvania, Sun has made quite a name for himself.
Sun made headlines in 2019 when he won an auction lunch with investor Warren Buffett. Bidding reached mind-boggling sums, with the crypto entrepreneur spending over $4.5 million to be the highest bidder. After the lunch in January 2020, Sun tweeted:
In December 2021, the Caribbean nation of Grenada announced the appointment of Sun as its new World Trade Organization (WTO) ambassador, following which Sun retired from his post as TRON’s CEO.
Members of TRON DAO Reserve include Alameda Research, Amber, Poloniex, Ankr, Mirana, Multichain, FalconX, and TPS Capital, to mention a few.
What is USDD Used For?
With USDD running on three blockchain networks, it serves as an effective online medium of payment that boasts low transaction fees.
As the world continues embracing decentralization, USDD stablecoin stands to disrupt the financial sector and minimize financial exclusion.
USDD’s stable nature also allows crypto traders to use it as a volatility hedge. In times of extreme market conditions, traders will be able to keep their holdings safe through USDD.
On top of this, traders can stake USDD and earn annualized yields. Per the TRON DAO Reserve website, traders that stake USDD stablecoins are eligible for a 28.46% APY.
What Makes USDD Unique?
TRON DAO Reserve has the ability to replenish reserves in the authorized contract when they fall beyond a certain threshold. Specifically, the DAO releases USDD from the issuance contract after getting five out of seven signatures.
The signature-authorized USDD stablecoin will be locked for 10 days before the authorized contract can withdraw the funds. Coupled with USDD’s responsive monetary policy mechanisms, the DAO’s ability to replenish reserves helps maintain USDD’s stability.
Additionally, TRON DAO Reserve ensures transparency by storing all collateral assets in on-chain accounts and listing them on its website. This helps set the token apart from other algorithmic stablecoins.
USDD vs. USDC vs. USDT
USDD stands out as an over-collateralized algorithmic stablecoin, setting it apart from its counterparts. It’s backed by a diverse basket of digital assets, maintaining a collateral ratio of 175%, which ensures its stability against market fluctuations. USDD’s unique design aims to offer users a reliable and secure store of value within the decentralized ecosystem and DeFi projects.
On the other hand, USDT is fiat-backed stablecoins, the same goes for USDC, directly pegged to the US dollar. USDC, founded by Circle, a well-known name in the cryptocurrency industry, has gained trust among users due to its transparent and regulated approach. It’s backed by a reserve of US dollars held in regulated financial institutions, providing confidence in its 1:1 peg.
USDT, while being the most widely available stablecoin, has faced scrutiny and concerns about its backing. It claims to be backed by an equivalent amount of US dollars, but doubts have arisen regarding the extent of this backing, leading to some questions about its transparency.
The Pros & Cons of USDD
One of USDD’s notable strengths is its adherence to the core principles of cryptocurrencies – decentralization. It operates without a centralized authority, aligning with the ethos of blockchain technology. USDD’s over-collateralization strategy is another significant advantage. By ensuring that the total collateral value far exceeds the stablecoin’s circulation, it minimizes the risk of de-pegging, providing a level of security to users.
The algorithmic nature of USDD stablecoin can be a double-edged sword. While it can adapt to market dynamics, it also introduces an element of unpredictability. Some may view this as a disadvantage, especially considering the history of algorithmic stablecoins like Terra, which experienced a notable collapse.
USDD Use Cases
USDD’s stability and reliability make it a good choice for traders, serving as a secure trading pair to hedge against market volatility or swiftly move between assets. In the world of DeFi, USDD stablecoin plays a pivotal role as a stable asset for lending, borrowing, yield farming, and liquidity provision.
As an efficient medium of exchange, USDD stablecoin facilitates cross-border transactions and serves as a store of value. Furthermore, some merchants and platforms accept USDD as a form of payment, contributing to its expanding utility in real-world applications
USDD stablecoin Price History
USDD stablecoin has demonstrated remarkable price stability throughout its existence, a notable achievement for an algorithmic stablecoin. Despite its decentralized nature, USDD stablecoin has consistently maintained its peg to the US dollar, typically trading at or near $1. This stability has made it a trusted choice for those seeking a decentralized store of value or a trading pair with minimal price fluctuations.
Even in the face of external events like the temporary de-pegging to $0.97 following the collapse of FTX, USDD swiftly rebounded to its intended peg of $1. This resilience showcases the effectiveness of its algorithmic design and over-collateralization strategy in mitigating price volatility.
Shortly after its initial launch, the USDD stablecoin price fell to $0.93, sparking concern among investors of a de-pegging. After all, a stablecoin is supposed to maintain parity with the US dollar, and the dip led some to question whether USDD would follow the fate of terraUSD.
To calm the situation, the TRON DAO Reserve published a series of tweets claiming that it’s acceptable for a stablecoin to go through periods of high volatility (“within +- 3%”). The claim was also supported by some crypto experts, while others remained skeptical.
The token showed higher volatility for several days after its launch and for nearly a month between June and July. Towards the end of July, however, things stabilized, and no significant shocks have been observed for the moment.
With the FTX collapse in November 2022, the USDD stablecoin depegged slightly again, falling to below $0.97 at one point.
A CoinDesk news report states that the USDD liquidity pool on DeFi protocol Curve saw a significant imbalance, with almost 80% of the pool comprising USDD stablecoin. In other words, more people wanted to sell USDD than buy it.
Sun was quick to address the situation, tweeting that it was most likely due to Alemeda (FTX’s sister company) selling their USDD to cover FTX’s liquidity issues, and that the pool has regained balance.
Can you mine USDD?
Unlike most stablecoins, USDD stablecoin can be mined. is indeed possible and is available on designated mining platforms (such as SunSwap, for example) or Poloniex – the centralized platform. TRON DAO Reserve works with designated platforms that promise up to 30% APR.
The second type is cooperative mining, with the interest rate for returns jointly supported by TRON DAO Reserve and will fluctuate around 30% APR. TRON DAO Reserve will do its best to ensure a stable interest rate for cooperative mining returns.
USDD alternatives
USDD stablecoin is not the only stablecoin on the market. There is BUSD, USDT, USDC, and many others. All the stablecoins serve more or less the same purpose: give people the ability to transfer funds via blockchain without worrying about price fluctuations which are an integral part of crypto. Stablecoins differ in the way they keep the price stable, their market cap, circulating supply, trading volume, and so on.
USDD stablecoin is currently the seventh stablecoin by market cap, being only outperformed by USDT and USDC. When it comes to trading volume, however, the situation is not as impressive. This volume is measured by tens of millions for USDD stablecoin, billions for USDC, and tens of billions for USDT. It doesn’t necessarily mean that USDT is more reliable per se, however, it does show a clear distrust toward the algorithmic stablecoins, especially after the story with UST (which was also an algorithmic stablecoin that lost its peg).
Since USDT and USDC also have a longer history, they enjoy more of an adoption rate in the DeFi space and exchange platforms. In other words, it will be simply easier to get your USDT or USDC traded in comparison to USDD. If you wish to learn more about stablecoins, USDC, and USDT in particular, check out our comparison article here.
How Is It Different From Other Stablecoins?
KAVA is not a stablecoin. It’s a cryptocurrency designed to power the Kava platform, which offers DeFi services. Unlike stablecoins, KAVA’s value is not pegged to a fiat currency or another asset. Its price fluctuates based on market supply and demand, similar to other cryptocurrencies.
Key differences between KAVA and stablecoins:
- Price stability: Stablecoins aim to maintain a stable price, while KAVA’s price can fluctuate.
- Purpose: Stablecoins primarily serve as a medium of exchange and store of value, while KAVA is a governance and utility token for the Kava ecosystem.
- Backing: Stablecoins are often backed by fiat currency, cryptocurrencies, or other assets, whereas KAVA’s value is derived from its role within the Kava platform.
While Kava does offer a stablecoin called USDX, it’s important to differentiate between the platform’s native token (KAVA) and its stablecoin offering.
How to buy USDD?
If you are interested in investing in USDD stablecoin, you can get it via most exchange platforms. Popular options for purchasing USDD include Bybit, Gate.io, Poloniex, KuCoin, and Huobi Global. The current price of USDD stablecoin fluctuates between $0.97 and $1.00, with a brief period of depegging in mid-June.
To buy USDD stablecoin on an exchange platform, you will need to create an account. This process typically takes only a few minutes and requires an email address and a mobile phone for multi-factor authentication. Once your account is set up, you can proceed to deposit funds. These cryptocurrency holdings can then be used to purchase USDD within the platform.
Where to store your USDD?
There is a ton of options for storage when it comes to USDD stablecoin, since the token is present on so many blockchain networks. If you purchased an ERC-20 or BEP-20 version of USDD stablecoin, you can keep your USDD in a safe and decentralized manner in Atomic Wallet.
Atomic Wallet supports all ERC-20 tokens and BSC tokens, even if some of them are not enabled by default. Simply deposit the token to your Ethereum address in the wallet and you’ll be able to store and manage your USDD in Atomic Wallet.
Other popular options include Trust Wallet, Metamask, and others.
What is USDD price?
At the time of writing this article, (02.08.2023), the USDD stablecoin price sits at $0.997656.
What is the trading volume of USDD?
Over the last 24 hours, the trading volume for USDD was $24,203,250.
What is the all-time high of USDD stablecoin?
The highest price paid for USDD of $1.04 was reached on November 9, 2022.
What is the circulating supply of USDD?
At the time of writing this article (02.08.2023), the circulating supply is 737,137,986 USDD.
Closing Thoughts
By leveraging responsive monetary policy mechanisms, USDD remains stable despite turbulence in the crypto market. As a result, the stablecoin positions itself as an ideal volatility hedge. Moreover, USDD’s support for three blockchain networks optimizes its use in everyday transactions. These features will help USDD rise to prominence quickly.
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