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    How Relevant is Justin Sun?

    This dashboard will explore the algorithmic stablecoin USDD recently announced by Justin Sun, $10B of crypto as collateral, and it's promised 30% yield.

    References

    About USDD

    • USDD is an algorithmic stablecoin that uses a balancing mechanism to pegged to the US Dollar
    • USDD will initially run on the TRON, BNB Chain, Ethereum network but can be bridged to any blockchains through BitTorrent chain
    • USDD to start circulation on 5 May, 2022

    USDD-TRX Balancing Mechanism

    • Achieve price stability by contracting USDD money supply when USDD price level is below target and expanding USDD money supply when USDD price level is above the target
    • Rely on a decentralized price oracle to estimate price target
    • Similar to UST-LUNA balancing mechanism, USDD uses TRX to absorb USDD's price fluctuations.
    • When USDD price is less than 1 USD, arbitragers could swap 1 USDD for 1 USD worth or TRX. Similarly, when USDD price is more than 1 USD, arbitragers could 1 USD worth or TRX for 1 USDD.
    • Super Representatives (SRs) will absorb USDD short-term price volatility by burning their USDD to mint TRX when USDD price falls below the target.

    Roadmap

    • May 5, 2022: USDD will be issued and enter circulation with TRON DAO Reserve and its stakeholders (whitelisted institution) as the first minters of USDD.
    • Oct 10, 2022: Testnet of USDD network to go live
    • Nov 30, 2022: Release of USDD network
    • Dec 30, 2022: USDD Mainnet to go live

    TRON DAO Reserve

    • Formulate and implement USDD monetary and exchange rate policies.
    • Ensure price stability and decentralization of USDD.
    • Lender of last resort to market participants and maintain reserve assets of various blockchains
    • Plan to raise $10 billion as early-stage reserves from prominent blockchain industry players.
    • Provide custody service for the reserves
    • Administer a reserve with a 30% interest rate per annum

    30% yield is attractive but is it sustainable?

    UST on Terra is widely adopted across Terra ecosystem including Anchor, Mirror, Pylon, MARS, etc. One of the main reason driving adoption of UST is Anchor 20% yield on deposit. However, it is clear that in order to sustain a 20% yield in long run is extremely difficult. TRON on the other hand is offer a 30% return, which is 10% higher than on Anchor! This to me is the first red flag. TRON also did not share the detail of how they are going to generate enough revenue to sustain the 30% yield or their business model behind it. Is TRON foundation going to subsidize the yield and what is the long-term sustainability plan for it.

    Can USDD endure the test of time

    For USDD to truly shine as a stablecoin, it has to matured and withstand the test of time, especially case of extreme market conditions. It is during these extreme market conditions that we will see if USDD can maintain its peg and how balancing mechanism and the different safe guards are put to work to protect the peg.

    Will USDD be adopted as currency of choice across different chains? Will dapps be built around USDD? Will UUSD gain enough trust from the community to use it? All these questions can only be answered over time.

    $10 Billion Reserve

    TRON DAO Reserve has stated that it planned to raise $10 billion in reserves but not much details has been shared publicly. It did not state who are these prominent blockchain industry players and if any funds are secured. It also didn't specify what assets will be used as the reserves. Since the stability of USDD depends on the reserve funds as a backstop in extreme market conditions, more details will need to be shared to give confidence to the community that this fund is indeed secured.