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Highlights
- Justin Sun confirms USDD 2.0 offers a 20% APY fully subsidized by Tron DAO, with interest sent to a transparent address.
- USDD stablecoin is backed primarily by TRX and claims a collateral ratio of 120%, secured by over $2.6 billion in assets.
- The USDD stablecoin has a circulating supply of $747 million.
Tron founder Justin Sun recently announced the launch of USDD 2.0, an updated version of the algorithmic stablecoin, offering a 20% annual percentage yield (APY). Sun addressed inquiries about the yield’s source, stating that it is entirely subsidized by the Tron DAO.
Justin Sun Announces USDD 2.0 with 20% Yield Backed by Tron DAO Reserves
In a recent post on X, Tron founder Justin Sun unveiled USDD 2.0, the next iteration of the decentralized stablecoin launched in 2022. The updated version promises a 20% APY, fully subsidized by the Tron DAO. Sun clarified that the yield will be distributed in advance to a publicly visible address to ensure transparency.
More so, Justin Sun addressed concerns regarding the origin of the high yield. The Tron founder stated
“It’s simply because we have plenty of money. So, stop asking me questions like, where does the yield come from?”
Sun emphasized that the funding comes directly from the Tron DAO’s reserves, alleviating skepticism about the sustainability of such returns.
Notably, stablecoin adoption has been gaining momentum across major exchanges. In a recent report, the newly launched Ripple stablecoin, RLUSD, has debuted on Bitstamp, offering trading pairs with USD, EUR, BTC, ETH, XRP, and USDT
USDD Backing and Collateralization Details
USDD 2.0, like its predecessor, is backed primarily by Tron’s native token, TRX, alongside other digital assets. According to official statements, the stablecoin maintains a collateralization ratio of 120%, with $2.6 billion in reserves supporting its $747 million circulating supply. These reserves include TRX and USDT, among other assets.
The stablecoin’s website claims that its over-collateralization model ensures stability and resilience. However, critics like Bluechip have raised concerns about its reliance on TRX and the absence of proper governance.
Despite criticism, the growing stablecoin adoption has led Circle to partner with Bison Digital Assets to expand MiCA-compliant USDC and EURC stablecoins in the EU.
Comparisons With Other Stablecoin Yields And Market Outlook
The 20% APY offered by USDD 2.0 positions it among the highest-yielding stablecoins in the market. Other competitors, such as DAI on the Spark Protocol, offer a 12% APY, while USDC provides a more modest 4.1% APY for Coinbase Wallet users.
However, high-yield stablecoins have historically faced scrutiny due to risks associated with their mechanisms, as seen in the collapse of Terra’s UST in 2022. Despite these risks, Justin Sun and the Tron DAO are optimistic about the future of USDD 2.0.
More so, the stablecoin market, dominated by giants like USDT and USDC, holds a combined value of over $215 billion, with algorithmic and crypto-backed stablecoins comprising $13 billion. While USDD has carved out a niche, its $747 million market cap remains modest compared to its larger peers.
Following Justin Sun’s recent announcement of strategic developments, TRON (TRX) price has surged by 6.25% to $0.2351. The market cap now stands at $20.25 billion, with trading volume spiking by 35% to $841.65 million in 24 hours.
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