USDD is an algorithmic stablecoin in the TRON ecosystem, issued by TRON DAO, operating under the mint–burn mechanism through TRX to maintain a stable price around 1 USD. Unlike UST, USDD tightly controls supply, has a reserve fund of over 559 million USD, and a cautious development strategy.
🔍 Overview:
Operating mechanism: Mint USDD by burning TRX, creating price differentials for arbitrage to maintain the peg.
Supply management: Only TRON DAO has the right to mint, limits issuance, applies a whitelist process to control growth rate.
Interest rate: Depositing USDD can yield up to 30%, but this is a short-term strategy that will adjust according to TVL and liquidity.
Reserve fund: Collateral assets of over 559 million USD, larger than the market cap of USDD (~542 million USD), providing a foundation to support the peg.
⚠️ Risk & Comparison With UST:
Similarities: Both use the mint–burn mechanism and arbitrage to maintain the peg, promising high yields.
Difference: USDD has a limited issuance, controlled by a central organization, with a transparent reserve fund and more cautious governance.
🧯 USDD briefly lost its peg (0.979 USD) in May 2022 due to the collapse of UST, but quickly recovered thanks to liquidity from the reserve fund.
🔮 Outlook:
Short term: Low risk due to supply management, strong reserve fund, and controlled growth strategy.
Long term: If the minting rights are opened to the community, USDD may face challenges similar to UST. Use cases need to expand to retain users as interest rates decrease.
✅ Conclusion:
USDD is operating cautiously to avoid the 'pitfall' of UST, but still heavily relies on market confidence, the ability to maintain long-term peg, and practical applications in the TRON ecosystem.