Introduction
USD Digital (USDD) officially made its debut on May 5, 2022, as a decentralised stablecoin on Tron, BNB Chain, and Ethereum blockchains. It is pegged to the U.S. dollar in a 1:1 ratio, meaning that USDD maintains its value at a fixed exchange rate to the U.S. dollar, whereby 1 USDD is always supposed to be equivalent to $1. USDD was developed by the team that founded Tron, which has since grown into an active ecosystem of builders. This tutorial will show you where you can buy $USDD and how to lend USDD to earn yield using SunSwap.
Key points:
- View the current lending APR here
- Calculate your earnings using the calculator
- No lockup
- Please note that you are lending and not staking
Step 1: Make sure you have a TronLink wallet
TronLink is a popular wallet in the Tron ecosystem and offers users the ability to stake their tokens, use blockchain apps and manage multiple tokens in one wallet. You can download the TronLink wallet here.
Step 2: Get yourself some $USDD tokens
Currently, you can purchase $USDD tokens on Kucoin, Poloniex or using the Sunswap Dex. We will be using $TRX tokens to swap to $USDD.
- Select ‘TRX’ in the ‘from’ tab
- Select ‘USDD’ in the ‘to’ tab
- Click ‘SWAP’
Great! Now you have $USDD tokens and can go to JustLend to delegate your stake.
Step 3: Go to JustLend and supply your $USDD
Go to JustLend and connect your TronLink wallet.
- Connect your wallet
- Click on ‘Supply’ $USDD
- Click on ‘Approve’
- Sign the transaction
- Now click on ‘Supply’ again
- Fill in how much $USDD you want to lend
- Click ‘Supply’
- Sign the transaction
- Success!
Is $USDD backed by FIAT Dollars?
No, $USDD is not bound by the duty of redemption in real U.S. dollars as is the case with centralised stablecoin issuers, and its price stability is maintained through a series of monetary policies adopted by the TDR based on market conditions
What is $USDD backed by?
The stability of USDD is backed by the reserve assets of the TDR, not the price of TRX.
- USDD’s price stability is maintained by a basket of monetary policies adopted by the TDR and backed by its reserve assets. As long as the TDR holds a sufficient and healthy reserve, the price of USDD is stable.
- The details of the TDR’s reserve assets are published in real-time on TRON DAO Reserve. As of now, there are 990 million USDC, 140 million USDT, 14,000 BTC, and 11 billion TRX in the reserve, with a total market value of close to $2.3 billion, 3 times the value of the 725 million USDD in circulation. Even under the extreme circumstance when the value of TRX reaches zero, the remaining reserve assets worth $1.4 billion are still double the value of USDD in circulation. Therefore, the TDR reserve can provide sufficient and healthy liquidity for the stability of USDD.
- The mutual-minting relationship between TRX and USDD is just part of the effort made to help maintain USDD’s linked exchange rate system, which can be explained by referring to Hong Kong’s case: the Hong Kong Monetary Authority allows swaps between the RMB and the HK dollars, but the RMB is not pegged to the HK dollar. In fact, the stability of the HK dollar is backed by a basket of currencies including the RMB.
Can USDD de-peg from $1?
Yes, the price of USDD is not strictly pegged to the U.S. dollar but floats up and down around it. The TDR considers it acceptable when the price of USDD fluctuates within a 3% range (up or down) under extremely volatile market conditions.
If USDD records a significant and unreasonable movement in its price, the TDR will strive to keep its value stable by taking concrete monetary policy interventions as it has done in the past.
Conclusion
$USDD is an up and coming stablecoin that is showing a lot of promise, bare in mind that algorithmic stablecoins come with unique risks – even if they are overcollateralized. If you are interested in learning more about $USDD, read our FAQs on the $USDD asset page.