Algorithmic stablecoin USDD - a risk to Tron, TRX, and the entire crypto market?

[Vincom]

The catastrophic collapse of UST and its subsequent impact on LUNA and the Terra ecosystem serve as a stark reminder of the risks inherent in algorithmic stablecoins. While several other projects emerged in that wave, USDD on Tron remains one of the few notable examples ^[1].

Initially, USDD was designed with a diversified reserve pool, including both Bitcoin and TRX. However, recent withdrawals of nearly 12,000 BTC have left the stablecoin solely backed by TRX. This shift has raised concerns among the crypto community about the potential for a black swan event, particularly as the market nears a potential uptrend and altcoin season ^[2].

Although USDD's market cap is currently lower than UST's was before its collapse (750M USD << 18B USD), the interconnectedness of the Tron ecosystem could lead to broader implications. The potential failure of USDD could have a ripple effect, even affecting the liquidity of TRC-20 USDT. While I personally avoid USDD, my holdings of USDT on Tron make me wary of these risks. As a precaution, I might explore USDC as a safer alternative.

The absence of community involvement in the Tron DAO Reserve's decision-making process contradicts the principles of decentralized governance. Given Justin Sun's track record of unreliability, I am not surprised by this outcome. The lack of trust in the project's leadership has dissuaded me from investing in TRX, even during its extended period of price recovery.

I want to know your opinion on this issue:

• Do you believe in the future of algorithmic stablecoins?
• Are you still using USDD or other algorithmic stablecoins?
• If it collapses, could USDD negatively impact the entire crypto market?

References:
[1] Algorithmic Stablecoin Tokens
[2] Justin Sun's USDD stablecoin is no longer backed by bitcoin

[Sophopt]

USDD does not use mechanisms where TRX is minted or burned to stabilize the price of USDD. Instead, it relies on a reserve of various cryptocurrencies to ensure stability. This reduces some of the risks that led to the collapse of UST but carries other risks primarily related to the quality and management of the reserve.

[alani123]

Justing sun is a man that got lucky enough to have created a crypto at a good enough time for it to take off. Thereafter it was revealed that much of the whitepaper was plagiarized.
Props on him for investing in development and partnerships but that's about all the credit one should give him.

The man saw much of his empire crumble after repeated hacks and still he won't change his ways about USDD. It's so weird to see him so defiant over something so done and over as algorithmic stablecoins.
So yes, indeed USDD would have collapsed now and would have caused a lot of spillover to the crypto ecosystem. But Justin used so much of community funds to support this nonsensical endeavor. These funds would have better been used for devops and security at his exchanges In part the damage has already been done before USDD collapsed.

[o48o]

• If it collapses, could USDD negatively impact the entire crypto market?

-cut-

It might as Tron is mooning as well, so it might be pulling UST. But Terra touched near $40B marketcap before crashing down. Tron has 14.5B now so i am hoping it will die before getting huge.

Even if my opinion is, that if someone is trusting Justin Sun at this point, i feel it's pretty much their own fault to get rekt. It's still probablu going to affect others if it moons from here before the crash. Even if someone is new in crypto, there are ton of stuff written about Justin Sun all over the internet, and frankly i wouldn't touch anything he has deep connection to.

Correction: I wouldn't hodl anything related to him, as i understand why some people want to send cheap usdt via tron, but that's it.

It's just a matter of time until he sees inside of jail, and even that won't assure everyone that he has done anything wrong.

[Sophopt]

It's just a matter of time until he sees inside of jail, and even that won't assure everyone that he has done anything wrong.

What about the algorithmic stablecoins on Cardano?

In part the damage has already been done before USDD collapsed.

USDD has not collapsed, which is not clear from your last sentence.

[betswift]

Justing sun is a man that got lucky enough to have created a crypto at a good enough time for it to take off. Thereafter it was revealed that much of the whitepaper was plagiarized.
Props on him for investing in development and partnerships but that's about all the credit one should give him.

The man saw much of his empire crumble after repeated hacks and still he won't change his ways about USDD. It's so weird to see him so defiant over something so done and over as algorithmic stablecoins.
So yes, indeed USDD would have collapsed now and would have caused a lot of spillover to the crypto ecosystem. But Justin used so much of community funds to support this nonsensical endeavor. These funds would have better been used for devops and security at his exchanges In part the damage has already been done before USDD collapsed.

He is an exceptional and extraordinary man, for sure Heard a lot of degen-oriented stuff about him, so to speak. Bold in his actions and sturdy at them, pushing the boundaries even with risks involved.