USDD is a decentralized algorithmic stablecoin created by the TRON network and was launched on BNB Chain, Ethereum and TRON.
The USDD stablecoin launched amidst great controversy over price fluctuations in the cryptocurrency market; however, it has since been able to prove its potential.
It is the 7th top stablecoin by market cap.
How USDD Works
The USDD price is fixed to a traditional asset, the US dollar. It maintains its 1:1 value to the US dollar by use of an algorithm, or set of rules.
The algorithm changes the supply of the USDD stablecoin based on market demand to meet the target price. When its demand is high, the algorithm will create more tokens to maintain the level of supply. Alternately, when its demand is low, it will burn (or permanently remove) tokens from the supply. The stablecoin is managed under the guidance of Tron DAO Reserve.
What is USDD Used For?
Similarly to other stablecoins such as USDT or USDC, the USDD stablecoin is used in trading to minimize price volatility on crypto exchanges. It allows traders and crypto investors to hold their money on an exchange without its value fluctuating.
Exchanges: Stablecoins are used to move money between cryptocurrency exchanges to assist with arbitrage.
Payroll: The use of USDD stablecoin for payrolls could be extremely effective in times when remote work beyond borders is increasing. It will cost less time and money to process payrolls for businesses and employees won’t have to worry about experiencing problems with their banks.
Safe Haven Asset: Other cryptocurrencies, such as Bitcoin, are not stable stores of value as their prices are highly volatile. This can be highly unsettling for people who need to access their crypto assets regularly. As a safe haven asset, users don’t have to worry about their money fluctuating.
Lending: Due to its high-yield, USDD is a great way for debt investors to collateralize their investments. This makes investing much more appealing.
Escrow: The process of escrow can be entirely automated using a stablecoin such as USDD. Without the intermediation of institutions, USDD is able to automatically handle the process using smart contract technology.
Payment: USDD can be used to complete everyday transactions. We can expect to see the use of stablecoins implemented in stores where payments are used by scanning a QR code. Businesses can benefit from this as they are able to avoid the high processing fees of traditional institutions.
Alternative to banking: Not everyone around the world has access to a bank account. With cryptocurrency, all users need is access to the internet to create their own account that they can then store USDD in. This will help unbanked people participate in the economy.
Where To Buy USDD
The USDD stablecoin has had a challenging entry into the market, however, it is slowly proving its potential. As it builds trust in the blockchain industry, it becomes available on more exchanges.
For now, you can trade USDD on major crypto exchange platforms. You are able to buy, sell or use the token for trading on both centralized and decentralized exchanges. USDD’s price is set at $1.
Before buying cryptocurrency, it is important for users to know the risks involved. Because centralized exchanges hold your private keys, you are at risk of losing access to your assets if there is a hack.
Holding your cryptocurrency in your own decentralized crypto wallet is recommended, but you put yourself at risk of losing your assets forever if you lose your private key or are targeted by hackers unknowingly.
In any case, it’s important to do your research before investing in any crypto project; this article is for guidance only and should not be seen as investment advice.
FAQs about USDD
How long has USDD existed?
The TRON network was founded in 2017 by Justin Sun. The network was created to revolutionize the entertainment system using decentralized technology. The global platform has grown to 90 million users since its launch and in 2022, it launched the USDD stablecoin.
What’s controversial about USDD?
USDD was launched on May 5th 2022, so it does not have much history. However, there is a lot of controversy surrounding its launch. The stablecoin was introduced just two days before the crash of terraUSD (UST), an algorithmic stablecoin that fell below $1 in price.
Due to the UST crash, many people feared that USDD would not be able to maintain its $1 value, resulting in an influx of criticism.
A month after its launch, USDD upgraded to become the first ever over-collateralized decentralized stablecoin (OCDS). The upgrade offers faster transactions with the highest collateral ratio around the globe at 200%, with a guaranteed minimum collateral ratio of 130%. The result of this was more stability and credibility for the USDD protocol.
On June 17, Tron DAO Reserve reassured users that USDD would not lose its peg to the US dollar, though a “certain % of volatility” would be unavoidable.
How many USDD tokens are there?
The authorized supply of USDD is $2,000,000,000.
Only $725,332,043 of the total supply is in circulation.
Can USDD be mined?
Yes, USDD can be mined. To mine it you need to be whitelisted by the Tron DAO Reserve during the first stage of their roadmap. In stage 3.0, anyone will be allowed to mine USDD on its decentralized network.
What is the market cap of USDD?
Market cap is found by multiplying the circulating supply of a token with its price.
The market cap of USDD is $725,332,043 ($1 * 725,332,043).
This amount correlates with the movement of price action in the crypto market, so the number is prone to fluctuations.
Biggest Competitors of USDD
The demand for stablecoins has not yet reached its peak, so the competition is increasingly high. Stablecoins are challenged to maintain their $1 price or 1:1 value to the USD yet also provide high-interest rates on savings.
The algorithmic stablecoin offers interest rates as high as 39%, making the 14% interest rate for USDC seem small. Yields of as much as 20% were offered for UST; however, it is important to know that this unusually high-interest rate was a major trigger for the crash of UST.
The biggest USDD competitors are:
What are the Future Plans for USDD?
The algorithmic stablecoin’s greatest challenge is proving its credibility in the crypto world by keeping its price at $1. It can do this by maintaining its peg to the US dollar. As it is still very new to the industry, it also needs to grow its user base.
The roadmap is in four stages. However, the exact timeline for these stages is unclear.
The four stages are as follows:
Stage 1 (1.0 Space)
USDD will be issued and enter circulation to be transacted and traded with by all.
Stage 2 (2.0 ISS)
The testnet for the USDD decentralized network will go live.
The testnet allows users and developers to test improvements and developments as if they were live on a real blockchain. This is useful as it avoids causing harm to real blockchain networks.
Stage 3 (3.0 Moon)
The USDD decentralized network will officially be released.
Stage 4 (4.0 Mars)
The USDD mainnet will go live.
The mainnet is the end product of the project which is fully available to the public to use.
Pros and Cons of USDD Stablecoin
- Faster transaction speed: Transacting funds through banks can be tedious due to the lengthy processing times. This is especially true when transacting across borders. USDD cuts down majorly on these times, with transactions processing in as little as 5 minutes.
- High-interest rate: USDD’s high-interest rate is the biggest pro of the stablecoin, however, it is also a con.
- Borderless: The ability to be an anonymous and borderless store of value makes an algorithmic stablecoin a necessity for the real world in places experiencing extreme inflation with their fiat currency or sanctions such as Venezuela as they cannot use their own currency to emigrate or transact across borders.
- Stable value: People from countries whose currency is prone to extreme fluctuations benefit by holding their funds in a store of stable value.
- Transparent: Transparency means that transactions can be viewed by anyone on the internet. This is useful as it dispels any confusion as to where funds are going.
- Lower fees: The price to transfer funds across borders tends to be highly expensive. Because USDD mitigates middlemen, it is able to offer low-fee transactions.
- High interest rate: USDD’s high-interest rate is also a cause for concern as we have seen high-interest rates cause crashes of stablecoins such as UST. Many believe that it is prone to the same fate as UST and will lose its stable price.
- Unknown future: USDD’s potential is still largely unknown due to its newness to the industry. As the next phases in the USD roadmap launch we will be able to better determine what it will achieve in the crypto market. However, it is always most important to do your own research and understand that you are using the digital asset at your own risk.