USDD is a Justin Solar-founded stablecoin that advertises a 20% yield paid to customers who’re keen to lend the token.
Over its a number of years of existence, it has destroyed its DAO, deserted its roadmap, and has extremely concentrated holdings.
Even now, there are two separate protocols that exist, each with tons of of hundreds of thousands in circulating provide and substantial variations in how they operate. Each additionally increase critical considerations about Solar’s function and about how these cash are managed.
USDD 1.0
USDD was launched as an algorithmic stablecoin modeled after the Terra/Luna system however paying even increased unsustainable rates of interest to customers.
Nevertheless, the coin shortly deserted its unique roadmap to be built-in into the core of the TRON community and develop into a unusually collateralized stablecoin operated in live performance with a number of companions, together with the fraudulent buying and selling agency Alameda Analysis.
It additionally marketed that it was ruled by a decentralized autonomous group (DAO) known as the TRON DAO Reserve.
Nevertheless, this DAO was successfully by no means consulted on issues associated to the coin; it wasn’t consulted for adjustments in collateral and wasn’t consulted when USDD selected to retailer its collateral at Solar-owned HTX.
Originally of the yr, Solar introduced that the brand new model, USDD 2.0, would substitute this coin and would supply “a 20% APY,” which it may afford “simply because we have plenty of money.”
This apparently meant that it was essential that customers cease asking Justin questions like “where does the yield come from?’”
USDD 2.0
USDD 2.0 is successfully a second model of one of many different Solar-founded stablecoins, the JUST stablecoin (USDJ).
Each of those cash are successfully modeled after the multi-collateral DAI system, with a mix of over-collateralized vaults and stablecoin “peg stability modules” to handle their provide.
It’s by no means been made clear why Solar and TRON profit from having these two stablecoins, which have successfully the identical mechanism, and USDJ has since been scheduled to be sundown.
This coin exists totally on TRON however has additionally issued a model on Ethereum, although that model lacks most of the options, together with the vaults basic to the design of the stablecoin.
A big portion of the token’s provide has been funded by belongings that got here straight from Solar-owned HTX, representing a considerable majority of the belongings earlier this summer time.
USDD 2.0 claims that its “governance framework of the USDD ecosystem is designed to be community-driven and decentralized, making certain inclusivity, transparency, and flexibility.
“Governance empowers stakeholders to make critical decisions regarding the protocol’s future, stability, and growth.”
Nevertheless, there’s no clear proof of a spot to take part on this governance; neither the JustLend DAO or the JST DAO appears to have governance management over USDD 2.0.
USDD 1.0 continues to be large
Surprisingly, even if USDD 1.0 has been sundown, it’s nonetheless roughly half the dimensions of the newer model.
USDD 1.0 has a provide of 27,678,569 on TRON, 124,146,228 on Ethereum, 110,581,328 on Binance Good Chain (BSC), and 5 on Avalanche C-Chain.
This can be a complete of roughly $262 million in complete provide.
TRON is the chain the place all of the “infrastructure” for the administration of this token lived, however unusually its remaining provide is rather more focused on BSC and Ethereum.
USDD 2.0 has a provide of 498,295,302 on TRON and eight,779,902 on Ethereum, for a complete of roughly 506 million.
USDD 1.0 now not discloses the place or if it has any collateral to protect the worth of those tokens.
At the moment, USDD 2.0 claims to have roughly $547 million in collateral, which is greater than the availability of USDD 2.0 however is inadequate to cowl the remaining provide of USDD 1.0.
Contributing to the strangeness, the entire quantity of collateral listed on the “Vault” web page for USDD is a mere $68 million.
A lot of the the rest is roughly $89 million within the “Peg Stability Module” and roughly $390 million within the so-called “Smart Allocator,” which was funded by belongings from Solar-owned HTX and which entails lending belongings to earn further yield.
Each variations have extremely concentrated holdings
USDD 1.0 on TRON has extremely concentrated holdings, with roughly 56% of the entire provide being held in TPyjyZfsYaXStgz2NmAraF1uZcMtkgNan5, an handle that was initially funded from an handle labeled as Poloniex, a Solar-owned change, on TRONScan.
Extra just lately this handle has obtained funds from Solar-owned HTX.
Moreover, 3.2% of the entire is held in TT2T17KZhoDu47i2E4FWxfG79zdkEWkU9N, a Solar-controlled handle.
USDD 1.0 on Ethereum has much more extremely concentrated holdings, with roughly 99% of the entire being held in a wise contract, which seems to be a bridge to the BitTorrent Chain.
Surprisingly, USDD_e, which appears as if it’s meant to be the availability of bridged USDD from Ethereum on Solar-founded BitTorrent Chain claims a a lot smaller provide than is held on this sensible contract.
USDD 1.0 on BSC is by some means much more concentrated, with a complete of roughly 99.5% in a wise contract, which seems to be a bridge to the BitTorrent Chain.
Nevertheless, USDD-b, which is supposed to be USDD bridged to BitTorrent Chain from BSC has a a lot smaller provide than is on this sensible contract.
On Avalanche’s C-Chain, roughly 98% of the availability is held in an automatic market maker contract towards bridged DAI. Nevertheless, the small provide of USDD on Avalanche C-Chain means this totals lower than $5 held on this contract.
USDD 2.0 on TRON has roughly 61% of its provide lent on JUSTLend, which makes it eligible for the backed 20% yield that Solar advertises.
Shortly earlier than the collapse of Terra, it reached roughly 75% of its complete provide deposited within the Anchor protocol, which paid roughly 20% yield backed by Terraform Labs.
USDD 2.0 on Ethereum is extra concentrated, with roughly 83% of the entire provide held in Solar-owned HTX.
For some purpose, HTX doesn’t embody USDD in its proof of reserves course of.
The extremely centralized holdings of USDD mixed with the dearth of disclosure of all of the collateral increase substantial questions concerning the security of those stablecoin techniques.
