Published: Feb 5, 2025 at 03:45 AM
Updated: Feb 4, 2025 at 08:17 PM
- Justin Sun assets USDD as the only truly decentralized stablecoin, highlighting its security features ahead of the USDD 2.0 launch.
- USDD 2.0 introduces a 20% staking APY, sparking concerns about its sustainability and comparison with past high-yield stablecoins.
- The new version may shift away from algorithmic features, incorporating a lending protocol with over-collateralized stablecoin minting.
Justin Sun has reiterated his position that USDD remains the only true decentralized stablecoin in the crypto market. Ahead of the anticipated launch of USDD 2.0, the Tron founder stated that the stablecoin offers full user control and eliminates risks such as fund freezing or withdrawals by authorities. In a recent post, Sun highlighted that USDD operates without central oversight, ensuring stability and autonomy.
USDD 2.0 will enable stakeholders to earn a 20% annual percentage yield (APY) through its staking mechanism. The TRON DAO supports USDD stability through USDT-USDD transactions that drive yield generation while protecting against risks according to Sun. The stability of these elevated stablecoin yields faces questions because they have similar characteristics to failed stablecoins from previous periods.
Sun’s promotional activities fail to reveal precise details regarding structural transformations of USDD 2.0 to the general public. USDD released its most up-to-date whitepaper in December 2022 which describes a decentralized finance (DeFi) system functioning as a digital central bank.
The upcoming update will depart from selected algorithmic aspects to implement mechanisms that resemble JUST DAO’s stablecoin (USDJ). According to beta website information, a lending protocol has been added that enables users to create stablecoins by providing assets backed by TRON-based investments.
The stablecoin sector continues to be dominated by market leaders Tether (USDT) and USD Coin (USDC). According to Coingecko data, Tether holds a market cap of $140 billion, while USD Coin follows with $54 billion. USDD ranks ninth among stablecoins with a market capitalization of $742 million.
The high-yield staking of USDD 2.0 will directly compete with Ethena’s USDe, which previously offered 20% APY before reducing it to 11%. Meanwhile, DAI, the fifth-largest stablecoin, provides 12% APY when staked with the Spark protocol, whereas USDC offers a more conservative 4.1% APY via Coinbase Wallet.
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