USDD

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Discover USDD's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is USDD?

USDD (Decentralized USD) is an algorithmic stablecoin launched in 2022 by Justin Sun, the founder of the Tron DAO. It operates on multiple blockchain networks, including Ethereum, Tron, and BNB Chain, and is pegged to the value of the US dollar in a 1:1 ratio. USDD is overcollateralized, backed by a diverse pool of digital assets such as TRX, BTC, and USDC, ensuring its stability and value. It is designed to maintain a fixed exchange rate to the US dollar, making it a reliable store of value within the decentralized ecosystem and DeFi applications.

How is USDD used?

USDD (Decentralized USD) is a stablecoin that serves several purposes in the cryptocurrency ecosystem. Here are some key ways it is used:

  1. Trading and Hedging: USDD is used as a stable trading pair to hedge against market volatility. It allows traders to swiftly move between assets and maintain a stable value, making it an attractive option for traders seeking to mitigate risks.

  2. DeFi Applications: USDD plays a pivotal role in decentralized finance (DeFi) by providing a stable asset for lending, borrowing, yield farming, and liquidity provision. Its stability and reliability make it a preferred choice for these applications.

  3. Cross-Border Transactions: As a stable and efficient medium of exchange, USDD facilitates cross-border transactions, allowing users to transfer funds without worrying about price fluctuations.

  1. Store of Value: USDD serves as a store of value, providing users with a secure and reliable digital asset that can be held and used for various purposes.

  2. Payment: Some merchants and platforms accept USDD as a form of payment, further expanding its utility in real-world applications.

  3. Mining: Unlike most stablecoins, USDD can be mined on designated platforms, offering users an opportunity to earn returns through cooperative mining with interest rates supported by TRON DAO Reserve.

Overall, USDD's unique features, such as its decentralized nature, over-collateralization, and Peg Stability Module, make it a versatile and reliable stablecoin for various use cases in the cryptocurrency space.

How do I store USDD?

To store USDD tokens, you can use a variety of wallets and methods. Here are some options:

  1. Ledger Hardware Wallet: Ledger offers a secure and reliable way to store your USDD tokens. You can choose from different Ledger hardware wallet models, such as the Ledger Nano S Plus or Ledger Nano X, which provide offline storage and signing of transactions. You can manage your USDD using the Ledger Live app, which allows you to track your balance, transaction history, and more.

  2. Atomic Wallet: Atomic Wallet supports both ERC-20 and BEP-20 versions of USDD. You can deposit the token to your Ethereum address in the wallet and manage your USDD securely.

  3. Trust Wallet: Trust Wallet is another popular option for storing USDD. You can download the Trust Wallet app on your mobile device or use the Chrome extension on your desktop. Once set up, you can connect your wallet to a decentralized exchange (DEX) to buy and manage your USDD.

  1. Metamask: Metamask is another wallet option that supports USDD. You can use it to store and manage your USDD tokens securely.

These wallets provide a secure and decentralized way to store your USDD tokens, ensuring that you have full control over your assets.

How to buy USDD?

To buy USDD (USDD) tokens, follow these steps:

  1. Choose a Reliable Exchange: Select a trustworthy centralized exchange such as KuCoin, Binance, MEXC, or Bitget.

  2. Create an Account: Sign up on the chosen exchange with your email address, mobile phone number, and country of residence. Ensure a strong password for security.

  3. Verify Your Account: Complete the identity verification process by providing personal information and uploading a valid Photo ID.

  1. Add a Payment Method: Link a credit/debit card or bank account to your exchange account.

  2. Fund Your Account: Deposit funds into your account using your chosen payment method.

  3. Navigate to the USDD Market: Find the USDD trading pairs on the exchange's spot market.

  1. Place an Order: Use your deposited funds to buy USDD. You can use market orders for instant purchases or limit orders to buy at a specified price.

  2. Confirm and Complete the Transaction: Once your order is executed, you will see your available USDD tokens in your trading account.

Additionally, you can also buy USDD using stablecoins like USDT, which can be purchased on the exchange or transferred from another wallet.

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History of USDD

The history of USDD (Decentralized USD) began with its launch on May 5, 2022, by TRON DAO. It was initially available on Ethereum and BNB Chain via BitTorrent’s cross-chain protocol. The rollout of the stablecoin was planned in four phases, leading to the launch of USDD Mainnet.

USDD was created by Justin Sun, the founder of TRON Network, with the goal of achieving full decentralization in the stablecoin market. Sun described USDD as bringing about Era 3.0 of stablecoins, characterized by complete decentralization and the end of reliance on centralized institutions to ensure price stability.

In its early days, USDD faced some volatility, with its price dipping to $0.93 shortly after its launch. TRON DAO Reserve explained that this was acceptable for a stablecoin, citing the need for flexibility in market conditions. The token continued to show higher volatility until the end of July 2022, when it stabilized.

In November 2022, USDD depegged slightly again, falling to below $0.97 due to the FTX collapse. This was attributed to Alameda Research selling their USDD to cover FTX’s liquidity issues, causing an imbalance in the USDD liquidity pool on the DeFi protocol Curve. However, the pool regained balance after Justin Sun addressed the situation.

Despite these early challenges, USDD has demonstrated remarkable price stability throughout its existence, consistently trading at or near $1. Its decentralized nature, over-collateralization, and innovative pegging system have made it a notable player in the stablecoin market.

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How USDD works

USDD, or Decentralized USD, is a stablecoin designed to maintain a stable value pegged to the U.S. dollar at a 1:1 ratio. It is an over-collateralized decentralized stablecoin, meaning that its value is backed by a basket of crypto assets, including TRX, BTC, USDT, and more, with a minimum collateralization ratio of 120%. This high collateralization ratio helps to counter depeg risk resulting from the volatility of the crypto markets.

Minting and Circulation

USDD minting is currently executed by the seven members of the TRON DAO Reserve, which includes exchanges such as Poloniex, Amber Group, Ankr, Mirana Ventures, Multichain Capital, FalconX, and TPS Capital. These members stake TRX, which triggers the release of an equivalent dollar value in USDD to the Circulating Account. The USDD is then transferred to the respective member.

Stability Mechanisms

To maintain its stability, USDD employs several mechanisms:

  • Over-Collateralization: The total value of collateralized assets is significantly higher than that of USDD in circulation, ensuring that each USDD in the market is backed by more than its value.
  • Peg Stability Module (PSM): This module allows users to swap USDD with other stablecoins like USDT or USDC at a 1:1 rate without slippage, ensuring minimal price fluctuations.
  • Linked Exchange Rate System (LERS): USDD operates on a linked exchange rate system, allowing for fluctuations within a defined band, similar to the Hong Kong dollar's system.
Availability and Adoption

USDD is available on a wide range of exchanges and decentralized applications, including HTX, Poloniex, Bybit, Kucoin, Uniswap, PancakeSwap, Sunswap, and more. It has also partnered with payment providers like Alchemy Pay, FatPay, and NOWPayments to facilitate real-world adoption. Additionally, USDD has been granted statutory status as an authorized digital currency and medium of exchange in the Commonwealth of Dominica.

Key Features
  • Multi-Chain Support: USDD is supported on multiple blockchain networks, including TRON, Ethereum, BNB Chain, Avalanche, Fantom, Polygon, Arbitrum, Aptos, Aurora, and Optimism, allowing for seamless transfers across chains.
  • Fast Transaction Speeds: Built on the TRON network, USDD benefits from high-speed transactions and robust security.
  • Decentralized: USDD is a decentralized stablecoin, governed by the TRON DAO Reserve, which adjusts monetary policies based on market conditions to maintain its stable value.

Overall, USDD aims to provide users with a digital currency that can be used for various transactions while minimizing price volatility, backed by a robust system of collateralization and stability mechanisms.

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USDD's strengths

USDD (USDD) has several strengths that contribute to its stability and reliability:

  1. Decentralization: USDD operates without a centralized authority, aligning with the ethos of blockchain technology. This ensures that no single entity can control or freeze user funds.

  2. Over-Collateralization: USDD is backed by a diverse basket of digital assets, including BTC, TRX, USDT, and more, with a collateralization ratio of at least 120% and currently standing at 204.5%. This surplus of collateral assets provides a protective buffer against price fluctuations, ensuring USDD's stability.

  3. Algorithmic Governance: USDD incorporates smart algorithms to maintain its peg to the US dollar. The Peg Stability Module (PSM) allows for seamless 1:1 swaps with other stablecoins, enhancing usability and stability.

  1. Multi-Chain Support: USDD is available on multiple blockchains, including TRON, Ethereum, BNB Chain, and others, facilitating seamless transactions across different networks.

  2. High-Speed Transactions: Built on the TRON network, USDD benefits from high-speed transactions and robust security.

  3. Regulatory Recognition: USDD has been granted statutory status as an authorized digital currency and medium of exchange in the Commonwealth of Dominica.

  1. Real-World Adoption: USDD has partnered with various payment providers, such as Alchemy Pay, FatPay, and NOWPayments, to expand its utility in real-world transactions.

These strengths make USDD a reliable and secure store of value within the decentralized ecosystem and DeFi, offering users a stable and efficient medium of exchange.

USDD's risks

USDD (USDD) carries inherent risks common to all crypto investments. Despite efforts to ensure stability, the token is not immune to market fluctuations and potential vulnerabilities. Key risks include:

  • Market Volatility: USDD, though over-collateralized, can still be affected by market conditions, leading to price fluctuations.
  • Decentralized Nature: While decentralized, USDD's reliance on multiple assets for collateralization can introduce risks if any of these assets experience significant drops in value.
  • Comparison to UST: USDD shares similarities with UST, which experienced a significant crash. Tron is working to mitigate these risks, but the potential for similar issues remains.
  • Risk Assessment: Portfolio managers should weigh the risks carefully, as even with a low risk gauge score, USDD is not entirely risk-free.

It is crucial for investors to be aware of these risks and perform due diligence before investing in USDD.

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Did USDD raise funds?

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USDD’s team

  • Justin Sun: Founder of TRON, the network behind USDD.
  • TRON: Developed USDD, founded by Justin Sun in 2017.

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