What is USDD: Will Justin Sun’s New Algorithmic Stablecoin Collapse Like UST?

In April 2022, Tron’s founder, Justin Sun, presented a new algorithmic $USDD stablecoin. At the moment, this coin is pegged to the U.S. dollar at a 1:1 ratio. However, after the collapse of UST and the LUNA token, investors’ confidence in algorithmic stablecoins is wholly undermined.

Will the new project of renowned crypto-enthusiast Justin Sun be able to restore users’ confidence in algorithmic stablecoins? This article contains detailed information about the new token, its creator, technological features, and predictions. Please read to the end, as it will be interesting!

Features of the New Algorithmic Stablecoin USDD

USDD is an algorithmic stablecoin of the TRON network, which was launched on BNB Chain, Ethereum, and TRON on May 5, 2022. Creator Justin Sun claims that USDD will provide investors with an annual percentage yield of 30%. It is higher than what UST had before the collapse.

Since this stablecoin was only recently introduced, it does not have a long history. However, the TRON blockchain has been around for years and is one of the largest decentralized platforms with its cryptocurrency. When it launched in 2017, TRON was initially focused on Asia. Since then, the platform has gone global and has over 50 million users. If you consider market capitalization, TRON cryptocurrency ranks 31st among all existing cryptocurrencies.

The Tron network has its balancing token TRX. You can buy, exchange and withdraw this coin in Trustee Wallet on favorable terms.

The similar history of TRON adds to the credibility of USDD coin, as it is the direct stablecoin of this popular network. However, this stablecoin operates on the principle of price maintenance through algorithms and smart contracts that can manage the number of tokens in circulation.

The algorithmic system reduces the total number of available tokens as soon as the price falls below the preferred value. If the price of a token rises, more tokens will be released into circulation. It is done to change the value of the stablecoin enough to bring it down to the desired price. The algorithm’s purpose is to have more control over the supply and demand of the coin.

Justin Sun: USDD Creator

TRON’s founder, Justin Sun, is a businessman known for his significant development of TRON as a DAO blockchain ecosystem in 2017. He is also the CEO of a file-sharing program known as BitTorrent. In 2017, Sun made the Forbes 30 Under 30 list in Asia and China. He has become a key figure in the cryptocurrency industry since earning his Master of Arts degree from the University of Pennsylvania in 2013.

Over the years, he has also been involved in various controversial situations, most recently involving the TRON stablecoin. When this stablecoin was first announced in late April, many cryptocurrency holders claimed it was a copy of Terra’s UST.

How Does USDD Work?

Justin Sun claims that it will become one of the most decentralized stablecoins in history. This is because TRON pooled all of its development resources to create it. According to the founder, it is an algorithmic stablecoin with a solid mathematical foundation, and investors have no reason to worry about its stability.

USDD stablecoin is directly managed by TRON DAO and pegged to the U.S. dollar at 1:1.

As soon as the algorithm detects a deviation of the coin’s price from $1, it burns or releases the coin, thereby adjusting its supply.

• When the price rises above $1, the algorithm creates new coins — the USDD supply increases and the stablecoin exchange rate goes down.
• When the price falls below $1, the algorithm burns the stablecoins — the supply decreases and the rate goes up.

Because of this, algorithmic stablecoins are more decentralized than other tokens that are backed by fiat currencies.

USDD’s $1 price is backed by TRX, the native cryptocurrency of the TRON network. The coin’s protocol uses TRX as the base currency to determine the price of the stablecoin.

Comparison of UST (Collapsed) and USDD

USDD and UST are considered algorithmic stablecoins, so they have much in common. The roadmaps of these two projects are very similar.

USDD is a TRON stablecoin that maintains a price with smart contracts and algorithms. TerraUSD (UST) is also an algorithmic stablecoin, fully decentralized and available on the Terra blockchain.

However, USDD is backed by Tron DAO, which plans to manage a $10 billion reserve in various crypto-assets to support its peg.

Justin Sun argues that the difference of his token makes it quite different from UST. He said USDD plans to focus on healthy growth, keeping its market capitalization below that of TRX, the Tron DAO reserve, and the entire cryptocurrency market capitalization.

He stated that the reserve would consist mainly of:

• Bitcoin;
• TRX;
• USDT;
• USDC;
• BUSD;
• DAI, etc.

Stablecoins could be deployed immediately if the dollar falls below its peg, gradually buying time to liquidate other assets.

Prospects for Algorithmic Stablecoin USDD

Even though the TRON stablecoin is relatively new and appeared on the cryptocurrency market less than a month ago, some signs can help you determine if USDD is a good investment or if you should avoid it.

Based on everything we know about USDD coin up to this point, it it can be attractive investment opportunity if you understand the risk inherent in investing in any cryptocurrency. Markets tend to be volatile. However, the way USDD has been implemented could mean that the coin’s price should remain relatively stable. In addition, remember that you will have to engage in staking to get a return that matches the APY’s target of 30%.

Conclusion

You have all the information you need to assess the prospects of algorithmic stablecoin USDD. At the moment, this coin is stable, despite the high volatility of the cryptocurrency market. This means that investors and ordinary users have confidence in the future of this project.

However, now is not the best time for experiments. Tens of thousands of users lost their savings in LUNA, UST, and some other failed projects in spring 2022. So, we recommend being cautious about investments and diversifying risks as much as possible. The safest way to keep your savings is in USDT, which is considered the safest stablecoin, backed by gold, cryptocurrency, and securities.

Trustee Wallet provides many benefits for those who buy, store, exchange, and withdraw cryptocurrency. Try it! You’ll be surprised by the favorable terms and convenience of the platform.