Hawkwang

USDD Core Risk Deep Analysis, Must-Watch Landmines Behind High Returns

As an algorithmic stablecoin of the Tron ecosystem, USDD claims to be pegged to 1 US dollar, but its underlying mechanism hides multiple fatal risks, making it far from a robust investment choice. The core risks focus on three points: first, vulnerabilities in centralized control; the issuance and destruction rely entirely on manual operations by the Tron Reserve, with the risk of private key theft in multi-signature wallets. If the circulation of trillions gets out of control, it could trigger a market crash. Second, flaws in the collateral and arbitrage mechanisms; the $10 billion reserves have not been fully realized, creating excessive binding to the TRX price, making it difficult to cover redemption demands in the event of a price crash. Moreover, arbitrage in the primary market is limited to whitelisted institutions, preventing ordinary users from participating, thus losing the market's self-stabilizing ability. Third, the high-yield trap; some platforms replicate the UST model with 20%-30% staking APY, which can easily trigger a 'sell-off → liquidation → devaluation' death spiral under extreme market conditions. Audits only verify code logic and cannot avoid systemic risks. Short-term arbitrage is feasible, but long-term holding requires caution to avoid repeating Terra's mistakes and carefully managing positions to mitigate the risk of going to zero!
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