Justin Sun, the co-founder of Tron and former Permanent Representative of Grenada to the World Trade Organization (WTO), is once again making headlines.
Yesterday, on January 15, Sun unveiled an improved version of the USDD algorithmic stablecoin.
Justin Sun Announces USDD 2.0 – A New Algorithmic Stablecoin With High Yield
USDD 2.0, according to Sun, will offer a 20% Annual Percentage Yield (APY) fully subsidized by the Tron DAO.
Unsurprisingly, the promise of a 20% APY, at a time when the United States Federal Reserve and central banks worldwide are slashing interest rates, explains why USDD is sparking demand and, in some quarters, excitement.
However, some remain skeptical about this new offer.
The collapse of the UST stablecoin, which not only brought down LUNA but also landed Do Kwon, the co-founder of the Terra Network, in prison, serves as a stark warning. Kwon could spend the rest of his life behind bars.
Despite the enticing offer, the similarities between USDD and UST are undeniable, leading some analysts to question the sustainability of this high yield.
Sun did not provide any specific explanation for the source of this high yield. In a post, he stated that the team has “plenty of money.”
What’s Special About USDD?
To understand USDD, it’s crucial to grasp the fundamental objective of all USD-pegged stablecoins: to maintain parity with the US dollar.
While USDT and USDC are backed by fiat currencies and other assets, including United States Treasuries, USDD is an algorithmic stablecoin.
It is backed by multiple assets, including TRX and USDT. Tron also says USDD is over-collateralized, currently by 346%.
After launching in May 2022, USDD offered an eye-popping 30% APY. At that time, interest rates were higher, and such a high yield, while risky, could be justified.
However, even with the 30% APY, market pressures, including sliding crypto prices, forced the Tron team to reduce the yield shortly thereafter.
The USDD 2.0 will offer a lower rate of 20%, which is still substantial.
Whether this re-launch will precede a broader market revival remains to be seen.
Many observers believe the crypto and TRX rallies may be nearing their end.
Recently, Bitcoin and cryptocurrencies have struggled to maintain momentum. Despite a significant rally in Q4 2024, Bitcoin and TRX have since retraced, retesting crucial support levels.
Attention is now focused on the upcoming presidential inauguration, where Donald Trump’s stance on crypto could influence market sentiment.
It remains uncertain whether this event, combined with the 20% APY offered by the Tron team, will drive a significant increase in USDD’s market capitalization.
Etherscan data shows that USDD has a market capitalization of $745 million.
(Source)
There are 1,353 USDD holders, out of which one address controls 97% of all tokens in circulation.
Will Tron (TRX) Rally After New Stablecoin – Could This Be The Bottom For TRX Price?
While USDD carries high risks, it does not preclude investors from gaining exposure to TRX. Since USDD is backed by multiple assets, including TRX, any uptick in demand could lift TRX.
This could provide further tailwinds, lifting TRX prices above $0.30 and towards $0.45.
(TRXUSDT)
TRX is under pressure, declining by more than 50% after reaching a high of $0.45 in Q4 2024.
Bulls must defend this week’s lows around $0.20. The TRXUSDT daily chart clearly shows a triple bottom at this level.
If bulls can build upon yesterday’s gains, TRX could surge, reclaiming $0.30 in the coming days.
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