Compared to high returns, I care more about whether stablecoins are 'stable'
In the past few years of increasing market volatility, I have slowly realized one thing:
For many ordinary users, the most important function of stablecoins is not to 'help you make money', but to keep close to 1 US dollar as stable as possible, providing a relatively reliable 'unit of account' when switching between different assets.
In the process of understanding different stablecoins, I also looked at some public materials and data pages, encountering designs like @USDD - Decentralized USD, which is over-collateralized and has on-chain verifiable reserves:
On one hand, by using various crypto assets as reserves and setting a certain ratio of over-collateralization, the logic of 'having actual assets to support' is written into the protocol;
On the other hand, core data such as collateral assets and collateral ratios are placed on-chain and in official transparency pages, making it convenient for users to check and compare before use, rather than just hearing 'we have reserves'.
The goal of these mechanisms is to keep USDD fluctuating around 1 US dollar as much as possible, and to assist price stability during extreme market conditions through preset rules and market mechanisms.
Of course, no stablecoin is 'absolutely safe', as there are different types of risks involved: price volatility of collateral assets, contract risks, changes in market liquidity, etc., which users need to understand and evaluate themselves. For me, what’s more important is:
Before using a certain stablecoin, can I see transparent data sources, clear mechanism introductions, and enough information to make my own judgments, rather than just relying on a simple promotional slogan.
This article is merely a study and compilation of publicly available information related to USDD, hoping to provide a perspective reference for friends researching stablecoin mechanisms. Any decisions regarding asset allocation and risk tolerance should be independently made by each user based on their own situation.
Disclaimer: The above content is a personal study note and does not constitute any investment advice or trading recommendations.