🧠 USDD Explained: Vaults vs PSM — Same Stablecoin, Totally Different Roles ⬇️
If you don’t fully understand how USDD is created, you’re leaving risk on the table. Let’s break it down clearly — no jargon, just what matters
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The Big Picture
Vaults = generate USDD by locking crypto collateral. You get liquidity while keeping your assets, but it comes with risk.
PSM (Peg Stability Module) = instantly swap existing stablecoins for USDD 1:1. No debt. No collateral. No management.
Together: Vaults expand supply. PSM keeps the peg stable when demand fluctuates.
1️⃣ How They Work
🏗 Vaults = Minting via Collateral
Lock TRX, stables, or other crypto
Mint USDD as a debt position
Must stay over-collateralized
Price drops → liquidation risk
💡 Think: “I want liquidity without selling my crypto.”
🏦 PSM = Instant Stablecoin Swap
Deposit USDT/USDC (or other approved stables)
Receive USDD at 1:1, instantly
Burn USDD to get stables back
💡 Think: “I just need USDD pegged to $1 — no risk, no extra work.”
2️⃣ Rules & Constraints
⚠️ Vaults:
Minimum collateral ratios & liquidation thresholds
Must actively manage risk
Volatility can wipe out positions
🟢 PSM:
Swap capacity limited by stablecoin reserves
Only approved stables accepted
No leverage, no yield tricks
PSM is intentionally simple — boring, but reliable.
3️⃣ Risk Profiles
🔥 Vaults = Market + User Risk
Collateral price drops → liquidation
Volatility amplifies exposure
Bad timing → forced sales
Vaults reward skill, attention, and strategy.
🌊 PSM = System & Liquidity Risk
Depends on reserve depth and stablecoin solvency
If reserves run low, swaps pause
No liquidation, no margin calls
Mental Map:
Vaults: borrow → mint → manage risk
PSM: swap stables → get USDD → done
One is capital-efficient but requires skill, the other is simple and safe but capacity-limited.
Want liquidity without selling crypto? → Vault
Want instant, peg-stable USDD? → PSM
Know the tool you’re using — and why it matters.