Introduction

In this research-based Bounty, I will investigate what Justin Sun has on offer. I will first examine his background, and then see what value there is in his plan for the new USDD stablecoin. I will also look into whether USDD is likely to accrue significant backing and what is the projection of the 30% yield that Sun is promising.

Who is Justin Sun and what is his plan?

I think in order to understand what Sun's plan is, it's important to first give some background and context. Justin Sun is best known as the founder of TRON, which was founded in July 2017. His current initiative is to use Tron to launch a new decentralized algorithmic stablecoin called USDD, which he claims to be 'the most decentralised stable coin that exists (credit).

Tron’s native coin TRX will be used to help the USDD stablecoin stay pegged to the $dollar, as TRX, (the governance token on the TRON blockchain) is said to absorb USDD's price volatility. Sun is also planning to use $10 billion of crypto (Tron DAO) as collateral. Upon the establishment of USDD, the TRON DAO Reserve will set its basic risk-free interest rate to 30% per annum and facilitate other decentralized and centralized organizations that accept USDD to implement consistent interest rate policies. Sun states that the TRON network boasts over $55 billion worth of financial assets (credit, page 5), so if we put things into perspective, backing up USDD with only $10B does not seem that unlikely after all.

Is USDD for real?

As of today, TRON's market cap stands at $6,653,012,397 (credit). I'm not sure where the earlier claim that TRON possesses $55B worth of financial assets comes from - it has been taken from the public documentation of USDD, however, it seems to be a little wishy-washy. There is not sufficient information online that would show how Sun is planning to back up this collateral, as it surely won't be from TRON's market cap.

In my eyes, TRON does not have a lot of potential, in comparison to Terra for example. If one compares the growth of both ecosystems in the past year, Terra's growth has been almost exponential. With USDD coming into the picture, Justin Sun will probably attract users with the promised 30% yield, but I'm not sure where he wants to take his project next. There is no explanation where the 55B dollars is coming from and how much of that he is willing to use after the $10B of initial collateral runs out. We have to take into account that if people will like his strategy and will see the potential for growth as they did with Terra, he won't have to worry about using more of that $55B for further backing. However, it doesn't seem like there is a lot of attraction to his project as of now, we can see that the transactional volume in the past 24h has only been 1,731M dollars - even though it launches in less than 3 days. I think that if people were excited about the launch there should have been more traffic in TRON this close to the launch of the new protocol, but there isn't...

Justin Sun's Roadmap

Justin promises the following roadmap to his new project:

First stage: USDD 1.0: Space.

USDD will be issued and enter circulation. The TRON DAO Reserve and its stakeholders (whitelisted institutions) will be the first minters of USDD.

Second stage: USDD 2.0: ISS.

Testnet of USDD decentralized network will go live, including:

1. TRON v5.0 supporting USDD is pre-released.
2. TRON v5.0 is deployed on TRON Testnet (Shasta and Nile).
3. Oracle is deployed to test the price feed system on TRON Testnet SRs.
4. TRON Testnet SRs determined to propose USDD, USDD testnet is officially launched.

Third stage: USDD 3.0: Moon.

USDD decentralized network will be released officially, including:

1. TRON v5.0 supporting USDD is released.
2. USDD implements comprehensive decentralized minting, swapping, and burning. Rights of mintage and burning are devolved to TRON Mainnet.

Final stage: USDD 4.0: Mars.

USDD Mainnet will go live, including:

1. TRON SRs are updated to v5.0.
2. TRON SRs start price feed with oracles deployed and ensure the stability of the system.
3. TRON SRs initiate proposals, including VM proposals and Market proposals.
4. USDD Mainnet officially goes live, and TRON DAO Reserve devolves its rights of issuance and burning USDD to TRON Mainnet.

Sun has until the end of this year (2022) to put this whole plan into action. Objectively speaking, the crucial aspect that we have to consider is how much attraction this will have among average users. As I said before, it doesn't seem that TRON is very popular as of now and I wonder how many new users this new stable USDD coin will bring.

Credit

If we were to compare UST's circulating supply, which stands now (as of 2nd May 2022) at:

What about the 30% yield?

I assume that this is the biggest selling point for Sun - just like with Anchor, he plans to attract new users with the amazing APY. I couldn't find anywhere on his roadmap or the documentation that is provided what he plans to do with the % over time. Anchor stuck to its 20% for a long time and has only started to decrease the earn APY this month. With USDD, it seems to be closely correlated with the traction it will get in the next few months. If there is a major hype about TRON's ecosystem and people suddenly start moving their funds there, the initial collateral of $10B won't last long, especially if whales get interested in the protocol too. On the other hand, if people won't trust Sun and will stick to Terra and other blockchains, the % should stay stable for a longer period of time. Again, I have not found a clear explanation about the plan for the % anywhere while conducting my research and this doesn't make me feel any better about the USDD protocol.

Conclusion

From afar perspective, Justin Sun's idea seems to be great at first. A new stablecoin, with significant collateral to back it up initially, a roadmap inspired by other successful protocols, like Anchor or Mars. Yet I don't think I will be moving any of my funds from Terra or other blockchains to TRON. As I have mentioned above, I don't find the documentation sufficient to reassure me that there is a significant structure and protection in the infrastructure. Yes, there will be people who will be attracted to the 30% APY, but if it's not clear to me where the % and the whole project are going from the beginning, then I probably won't be putting my money into Sun's pockets...