USDD (USDD) is an algorithmic stablecoin in the Tron ecosystem, announced by Justin Sun in late April and launched in early May 2022. Just three days after that, the stablecoin TerraUSD (UST) lost its peg to the dollar, although before that it was at the peak of popularity, almost no one doubted its stability.
Despite the collapse of UST, which significantly undermined confidence in algo-stablecoins, Justin Sun said that he was not going to abandon the project and promised that USDD would not repeat the fate of the ill-fated TerraUSD.
The USDD protocol runs on the decentralized TRON network, which is equipped with market regulation tools to keep the price of the currency stable. The decentralized organization TRON DAO Reserve has implemented highly liquid digital assets such as BTC, USDT, and TRX for excess collateral in the protocol. It is essential that the total value of collateralized assets always remain higher than the total value of USDDs outstanding.
The USDD protocol relies on a decentralized price oracle to determine the exact price. Oracle works like this:
- Super Representatives (SRs) provide an oracle of USDD prices on the TRON network, who are required to vote on what they believe is the current US dollar exchange rate.
- Every N new blocks in the blockchain, the votes are counted, and based on the average results, the actual indicators are determined.
- Everyone who voted within the limits of no more than a certain deviation from the actual indicator is paid a reward. Thus, SR has the incentive to vote honestly. Others, on the contrary, will be fined.