- USDD 2.0 promises 20% APY fully subsidized by Tron DAO reserves.
- The stablecoin relies on over-collateralization with TRX and other assets.
- Transparency assured as yield is distributed in advance to public address.
Tron’s latest attempt at a stablecoin, USDD 2.0, offers a 20% APY, subsidized by the Tron DAO. However, the reliance on a volatile TRX token raises concerns about the coin’s long-term stability and sustainability.
Tron’s Justin Sun Announces USDD 2.0
Tron is set to launch an updated version of its stablecoin, USDD 2.0, promising a 20% annual percentage yield (APY) fully backed by Tron DAO reserves. The updated stablecoin aims to offer users a high yield and address prior community concerns after the failure of the first version of USDD.
Tron intends to distribute the 20% yield in advance to a publicly visible address to ensure transparency. Justin Sun, the founder of Tron, emphasized that the yield will be subsidized by the Tron DAO’s substantial reserves.
“It’s simply because we have plenty of money. So, stop asking me questions like “where does the yield come from.”-Sun
However, the crypto community remains cautious because of the previous instability and concerns over USDD 1.0, which faced challenges to maintain its dollar peg.
USDD 2.0 Backing and Collateralization
USDD 2.0 will use the ecosystem’s native token, TRX and other digital assets as collateral and maintain a collateralization ratio of 120%. The excess collateralization is meant to ensure the stability of the stablecoin. The new version of USDD promises greater transparency and stability but still faces skepticism due to its reliance on a volatile asset.
The announcement of USDD 2.0 follows the failure of the first version, which was removed from major exchanges after its backing was shifted to TRX. The initial USDD 1.0 had initially offered a 30% APY, which was later reduced after market turbulence and a major withdrawal of Bitcoin from its reserves.
However, Sun has expressed confidence in the success of USDD 2.0. The launch is part of a broader strategy to increase the adoption of the Tron ecosystem. Recently, the price of TRX surged which illustrated increased optimism from dedicated investors about the potential of the project.
How USDD 2.0 Compares with Other Stablecoins
The stablecoin market, dominated by USDT and USDC, continues to grow. The addition of USDD 2.0 introduces another competitor with a high-yield offering. Although USDD controls a relatively smaller market cap, the increased interest in stablecoins could boost its growth.
Tron’s promise of a high APY is one of the most attractive offers in the current market. However, similar promises by projects such as DAI and USDC, have faced scrutiny due to sustainability concerns. These stablecoins highlight the increased demand and risks associated with such products.