The closed loop of stablecoin yields has reached a point where the biggest controversy is no longer 'whether there are yields,' but 'who decides where the yields come from.' USDD 2.0 uses Smart Allocator for real yields, but the main issue is even sharper: does the Allocator's strategy whitelist filter out risks, or does it concentrate power?
The core of the Allocator is not about throwing money out, but rather deciding 'which protocols are worthy of being trusted by the system.' When USDD allocates a portion of its reserves to external protocols, the risk boundaries of USDD no longer depend solely on collateral and liquidation but also on the contract risks, liquidity risks, and governance risks of the external protocols. Thus, the strategy whitelist becomes USDD's second layer balance sheet: each strategy on your whitelist is an external credit you acknowledge.
Why does this matter involve power? Because the whitelist is not determined by the market; it requires governance layer selection. The governance layer can be conservative, only selecting the most mature lending and liquidity scenarios, yielding thinner but steadier returns; or it can be aggressive, chasing higher returns, yielding more eye-catching profits but with greater tail risks. Externally, the market sees the APY; internally, the system bears the risk exposure. The more 'real yield closed loop' there is, the clearer the principles of strategy selection need to be articulated: how to set the risk control upper limit, how to assess correlation, and how to trigger the withdrawal mechanism.
So what matters is: when stablecoins incorporate yield into the system, they inevitably move towards 'on-chain asset management.' The core of asset management is not yield, but risk budgeting and decision transparency. The narrative of USDD 2.0 emphasizes on-chain verifiability and self-evident mechanisms, so the strategy whitelist must be consistent with this narrative: it should not be arbitrary; it should be explainable, verifiable, and retractable. Otherwise, real yield will turn into real controversy: the market will ask, are you sacrificing the safety margin of stablecoins for yield? Are you amplifying risks during favorable cycles?
The foundation of USDD remains over-collateralization and PSM: the former ensures repayment buffers, while the latter ensures short-term anchoring. The Allocator can only operate without undermining the foundation. In other words, no matter how smart the Allocator's decisions are, it cannot shake the bottom line of 'redemption and exit.' The significance of the whitelist should be to keep risk within an acceptable range, rather than moving risk to unseen corners.
The risk is that if the strategy whitelist chases high returns, it will introduce tail risks into the stablecoin's balance sheet.
This stems from the fact that the external protocol risk and the anchoring safety of USDD share the same set of trust and liquidity.
I only focus on one metric - whether the risk correlation targeted by the Allocator synchronously rises when market volatility increases.
USDD 2.0 aims to prove that stablecoins can have a real yield closed loop, but the core test of the real yield closed loop is not yield, but the transparency of governance and risk control. Would you prefer the strategy whitelist of USDD to be more conservative, or are you more willing for it to take on more external risks for growth?