Tron founder Justin Sun has unveiled the launch of USDD 2.0, featuring a sizable 20% annual percentage yield (APY), fully backed by TRON DAO. In a recent tweet, Sun encouraged the crypto community to embrace the new offering, insisting the high yield is due to TRON's robust financial health, urging people to stop questioning its backing.
USDD 2.0 is about to launch with a 20% APY, fully subsidized by @trondao . All interest will be sent in advance to a transparent address. There’s no other reason—it’s simply because we have plenty of money. So, stop asking me questions like “where does the yield come from.”
— H.E. Justin Sun 🍌 (@justinsuntron) January 15, 2025
USDD was originally launched in May 2022 as a decentralized algorithmic stablecoin on the TRON blockchain. Just one month after the launch, the major algorithmic stablecoin Terra's UST collapsed, causing all projects that were copying its design to switch to a more stable overcollaterized model.
Self-reportedly, USDD maintains one of the highest collateral to market cap ratio of 200%. Nevertheless, the stablecoin struggled to maintain its peg during FTX crisis in October 2022.
In August 2024, it was observed that approximately 12,000 bitcoins, valued at around $726 million, were removed from USDD's collateral reserves without a formal announcement from the TRON DAO Reserve that governs it. This adjustment resulted in TRX becoming the primary asset backing USDD. Justin Sun addressed the change, stating that the mechanism allows collateral holders to withdraw assets without requiring approval, and emphasized plans to upgrade USDD to enhance its competitiveness as a decentralized stablecoin.
Interest incentives were always at the core of USDD strategy. At the launch, USDD offered 30% APY. The yield was later lowered to 10%, still competitive in its product range.
This new revival will now offer 20% APY amid the late stage of a bull market, which may pick up again after Trump takes office on January 20. The announcement has drawn some skepticism due to Tron's leadership.
At the time of writing USDD has around 750,000 million tokens in circulation, ranking it 6th largest in the stablecoin market.
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