Recently spent some time delving into the upgrade of USDD 2.0. This thing has transitioned from the pure algorithmic model of 1.0 to an over-collateralized decentralized stablecoin, which is quite a change. In simple terms, USDD 1.0 borrowed the arbitrage mechanism of UST, but after Terra collapsed, they quickly turned to 2.0, with the core idea being 'trust through stability'—using solid asset reserves to build trust rather than relying on algorithmic belief.

From an architectural perspective, USDD 2.0 primarily relies on three modules: PSM (Peg Stability Module) provides a 1:1 rigid redemption of USDD and USDT, with virtually zero slippage; CDP (Collateralized Debt Position) allows users to over-collateralize TRX or BTC to generate USDD, with a dynamic collateralization rate, usually >120%; and Smart Allocator, which invests reserve assets into low-risk DeFi protocols like JustLend, generating real returns that flow back into the system.

In terms of reserve composition, TRX accounts for 40-50%, USDT is similar, BTC is 10-15%, which is diversified but has concentrated risks, especially the reliance on USDT—if Tether encounters issues, USDD would take a significant hit. However, the overall collateralization rate exceeds 120%, and it is transparent and verifiable on-chain, which is much stronger than centralized stablecoins.

Moreover, regarding the sUSDD that users are concerned about, it claims a 12% APY, with a tiered design, offering high yields for the first $50 million TVL, sourced from DeFi interest + PoS rewards + TRON DAO subsidies. The subsidy part relies on platform fees to replenish, which is sustainable in the short term but depends on ecosystem prosperity in the long term. Compared to DAI's sDAI (~5%) or FRAX (5-6%), USDD's high yield is attractive, but the risk is the volatility of returns, not a total loss of principal.

Multichain expansion is also worth mentioning, with native deployment on Ethereum, avoiding cross-chain bridge risks, directly challenging established players like DAI. In governance, TRON DAO Reserve acts like a 'central bank', efficient but somewhat centralized, with the community fine-tuning parameters through JST.

Overall, USDD 2.0 is a rational return, addressing some pain points of the trilemma, but inherent risks remain. @USDD - Decentralized USD This upgrade has indeed solidified its position in the TRON ecosystem. #USDD以稳见信