USDTRON’s USDD 2.0 Revamp Promises 20% APY, Justin Sun Cites Abundant Funds
A Bold Promise Amid Lingering Skepticism
TRON founder Justin Sun has announced USDD 2.0, a reimagined version of the blockchain’s algorithmic stablecoin, promising an eye-catching 20% annual percentage yield (APY). Declaring confidence in TRON’s financial position, Sun remarked, “There’s no other reason—it’s simply because we have plenty of money.”
Dismissing concerns about the source of these high returns, he added, “Stop asking me questions like ‘where does the yield come from.’” Despite the bold claims, the announcement has reignited scrutiny over the project’s viability and sustainability, given the challenges faced by its predecessor.
The original USDD, launched in 2022 with an ambitious 30% APY, faced significant hurdles, including repeated failures to maintain its $1 peg. Transparency issues further eroded trust, with TRON DAO Reserve withdrawing 12,000 Bitcoin from its collateral reserves without community approval, leaving USDD heavily backed by TRX, TRON’s native token. These controversies led to delistings from major exchanges and drew comparisons to Terra’s UST, the ill-fated stablecoin that triggered a $40 billion collapse in 2022.
USDD 2.0’s current metrics paint a mixed picture. As of January 2025, its market cap stands at $746 million, with trading concentrated on KuCoin, Bybit, and Gate.io. TRON claims the stablecoin is 120% over-collateralized, supported by assets worth $2.6 billion, primarily composed of TRX and USDT. However, critics argue that relying on a volatile asset like TRX undermines stability. Bluechip, a leading stablecoin rating agency, has also voiced concerns, stating, “USDD holders have no legal or code-based protection and are at the mercy of TRON DAO Reserve.”
Governance and transparency remain contentious issues. No updates to the protocol’s whitepaper have been made since December 2022, and the last recorded governance vote occurred in May 2023. Community platforms and official governance sites provide little information about the changes in USDD 2.0. Observers note that this opacity directly contradicts TRON’s assertions of transparency, casting doubts on the project’s long-term vision.
For those wanting to learn about the protocol, a documentation website linked from the beta site provides limited details about a system similar to JUST Stable and USDJ, which are derivatives of Maker.
Sun has assured investors that the 20% APY will be subsidized entirely by TRON DAO, with interest payments pre-funded to a transparent address. While this approach aims to address concerns over payout mechanisms, the absence of a detailed profitability model raises alarms. Similar promises of high yields have led to disastrous outcomes in the past, with the collapse of Anchor Protocol’s UST serving as a stark reminder. For comparison, DAI offers a 12% APY through Spark Protocol, while USDC provides a modest 4.1% APY via Coinbase Wallet.
Despite TRON’s efforts to position USDD 2.0 as a competitive player, algorithmic stablecoins represent a niche within the broader market. Dominated by fiat-backed options like Tether (USDT) and USD Coin (USDC), the stablecoin sector allocates only $13 billion to algorithmic variants. TRON’s earlier pivot to USDJ, a derivative of MakerDAO’s DAI, also struggled to gain traction, with a market cap of just $23 million.
This article has been refined and enhanced by ChatGPT.
