USDD (USDD)

What Is USDD?

USDD is a TRON stablecoin and digital asset that launched on BNB Chain, Ethereum and TRON on May 5, 2022. Justin Sun claims that USDD will provide investors with an annual percentage yield of 30%.

Since the USDD stablecoin was just introduced in late April, it doesn't have a lengthy history. However, the TRON blockchain has been around for years and is among the largest decentralized platforms, with its own cryptocurrency. When the Singapore-based Tron Foundation introduced TRON in 2017, it was initially marketed to Asia. Since that time, the platform has gone global and now boasts over 50 million accounts. When taking market capitalization into account, the TRON cryptocurrency ranks 31st among all options.

Looking specifically at USDD, it’s a TRON stablecoin that will be available across several different networks. There are a wide range of different stablecoins that you can select from, which include everything from

Binance USD to Tether. The reason why the USDD stablecoin is considered to be similar to UST is because both of these options are algorithmic stablecoins, which work by maintaining price stability through algorithms as well as smart contracts that are able to manage the number of tokens in circulation. 

The algorithmic stablecoin system reduces the total number of tokens available once the price dips below its preferred value. In the event that the token’s price goes higher than the preferred price, more tokens will be put into circulation to alter the stablecoin's value enough for it to dip to the correct price. The purpose of using an algorithmic stablecoin is to have more control over a coin's supply and demand.

Who Is Justin Sun?

As the founder of TRON, Justin Sun is a business executive and entrepreneur who's mainly known for developing TRON in 2017 as a blockchain DAO ecosystem. Sun is also the CEO for the file-sharing program known as BitTorrent. He earned a spot on the Forbes 30 Under 30 list in Asia and China back in 2017. Since earning a Master of Arts from the University of Pennsylvania in 2013, Sun has been a key figure in the cryptocurrency industry.

He has also been involved in his fair share of controversies over the years, the latest of which is central to the TRON stablecoin. When this stablecoin was first announced in late April, many crypto holders claimed that the stablecoin was a copy of Terra's UST stablecoin. Despite these claims, Do Kwon, the founder of Terra, has stated that he welcomes the initiative and hinted at the possibility of a TRON partnership at some point in the future.

How Does USDD Work?

Now that you have an idea of what USDD is, let’s learn more about the way it works, and how it's able to maintain its price. The USDD stablecoin is set to be available on TRON, Ethereum and Binance Smart Chain. This digital asset was also launched with the assistance of other key blockchain parties. Justin Sun claims that the USDD stablecoin is going to be among the most decentralized stablecoins in history. To create the USDD stablecoin, TRON pooled all of its resources to develop USDD. As an algorithmic stablecoin with a solid mathematical algorithmic foundation, higher token prices will result in additional tokens being issued to bring the TRON stablecoin value down.

The USDD stablecoin is directly managed by TRON DAO and is set to be pegged to the U.S. dollar at a 1:1 ratio, which means that the value of this digital currency is tied to the value of the U.S. dollar. If you've invested in Terra's UST before, the USDD stablecoin functions almost just like the Terra UST. Both of these are algorithmic stablecoins.

When the stablecoin dips below the aforementioned peg ratio, users are given the opportunity to redeem a single USDD for one U.S. dollar. When the price of the stablecoin goes higher than the $1 pegged amount, it's possible to trade one U.S. dollar for one USDD.

TRON DAO’s Four-Stage USDD Plan

At the moment, the USDD stablecoin is expected to adhere to a four-stage road map. These stages are separated into the Space, International Space Station, Moon and Mars stages. At the moment, details are only known about the initial two stages, and are centered around the strategies and management techniques that will allow the USDD stablecoin to remain pegged.

During the 1.0 Space stage, USDD stablecoin management is given to major blockchain institutions as well as the TRON DAO reserve. The TRON DAO reserve delivers custody service of the $10 billion in liquid assets that were raised from partners in the blockchain industry.

These assets are used as early-stage reserves to make sure that the USDD rate remains stable and that convertibility is allowed. Once the TRON stablecoin was launched on May 5, the TRON DAO reserve set the risk-free interest rate at 30% per year. They’re also encouraging other centralized and decentralized organizations that accept the USDD stablecoin to implement relatively consistent rates. Keep in mind, however, that other organizations don't have to adhere to Tron's guidance.

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