Let's look at what USDD is and what is it backed by.

For those who are unfamiliar with the the neighbourhood's new kid, it's called USDD and it's part of the famous TRON (TRX) family.

Decentralized USD (USDD) is an algorithmic stablecoin that was launched on May 5th (hmm) and quickly became the 8th largest stablecoin by market cap, replacing an "older" algorithmic stablecoin that has unfortunately died around the same time...

USDD was created by the infamous Justin Sun. A quick google search will tell you all you need to know. You can also check the pinned post in my profile if you wish.

How does it work?

USDD works the same way UST worked, but with TRX. When the price depegs from $1, the protocol allows users to buy 1 USDD for a discount in an external market. They can then swap 1 USDD for $1 worth of TRX in the protocol. Each swap results in 1 USDD to burn in the system, which then gradually reduces its circulating supply. The opposite happens when/if USDD raises above $1. You can read more about it here

What is it backed by?

According to their website USDD is backed by... checks notes, ah!, "stable assets"! Stable assets such as 10 billion TRX tokens, 14,000 BTC and 140 million USDT, my favourite cash-backed stablecoin.

On the 14th June, the Tron DAO reserve (that runs the stablecoin) had withdrawn 500 million USDC. to buy TRX in order to maintain the price of USDD after the stablecoin had fallen to $0.9757.

On 15 June, the reserve had purchased a further 100 million USDC to buy TRX as the price of USDD fell to $0.9567. The next day, the Reserve took out three billion TRX from exchanges in an attempt to “safeguard the overall blockchain industry and crypto market”. On the 17th of June, the reserve said that a further 100 million USDC would be used to purchase TRX.

Phew, thank god they did all that to bring USDD back to its peg! Oh wait, it's still trading at $0.9635 at the time of writing this post..

At least there aren't more red flags... right??

Well, don't worry! If you own USDD, you can just stake it on KuCoin's “USDD High Profit Staking” program with an APR of 60%!.

Poloniex, too came up with its own staking program with 40% APY! Jump in quickly boys!

Lastly, let's look at the beautiful chart. Oh yeah. Now that's what a stablecoin chart looks like!

Well, that's it folks. USDD is 300% backed by safe assets such as TRX and USDT. Even if the prices keep falling, we can just keep it pumping by minting TRX while you enjoy some tasty 60% APR!

Justin Sun explicitly has said that they have learnt from UST's mistakes so I am sure nothing will ever happen.

On a serious note, I am not claiming that USDD will collapse soon, but I am just bringing the red flags to your attention. Even after all these collaterals being used, the price remains depegged. Exchanges and other protocols offering sky-high and "risk-free" yields is a massive red flag. Combined with its creator's sketchy past and the coincidental timeline... it just leaves a bad feeling in my gut. Proceed with caution.