At three in the morning, the faint light of the phone screen illuminated Xiao Li's face. He skillfully switched between DeFi interfaces, a barely perceptible smile on his lips. Another 2000 yuan, safely credited. This has almost become his unwavering 'bedtime ritual' for the past month—taking advantage of fleeting price differences in the stablecoin market for arbitrage.
His secret lies not in those wildly fluctuating 'algorithmic stablecoins' that can easily deviate by dozens of percent, but in a seemingly calm harbor: USDD. While surrounding stablecoins struggle like startled birds at the edge of an abyss, at 0.90 or even lower, the price line of USDD seems to be firmly pinned around 0.999 dollars by an invisible hand, steady and reassuring.
The core of this stability comes from its upgraded PSM (Peg Stability Module) mechanism. Xiao Li's 'path to wealth' is based on this. Simply put, PSM is like an official, never-closing exchange counter that allows users to swap USDD for an equivalent amount of USDC (or other stable assets) at a fixed ratio of 1:1, without any slippage. This mechanism serves as the 'anchor' for USDD prices.
The logic of arbitrage is as clear as a math problem: whenever market panic or demand fluctuations cause USDD to briefly drop to 0.998 or lower in the public trading markets (like Uniswap, SunSwap), arbitragers (like Xiao Li) will act immediately. They quickly buy USDD at a discount price on the market, then rush into the PSM treasury to swap the low-priced USDD 1:1 for a full value of USDC, instantly locking in the price difference profit. This operation continually buys back low-priced USDD from the market and consumes the reserves in the PSM until the market price is forcefully pulled back to near 1 dollar.
Conversely, when USDD is at a premium, arbitragers deposit USDC and mint new USDD to sell in the market. Through buying and selling, minting and redeeming, profits are extracted, and prices return to stability.
This is why many stablecoins have recently staged a 'diving competition' while USDD remains unmoved. The PSM module on the TRON network currently holds nearly fifty million dollars in real-time liquidity, ready to welcome any arbitrager to 'maintain price stability.' Coupled with ample liquidity depth on chains like ETH and BSC, it forms a multi-layered, automated price defense network.
