Justin Sun announced today that Tron will soon launch USDD 2.0, attempting to create a refreshed version of a former stablecoin.
Justin Sun, the founder of Tron, announced the upcoming launch of USDD 2.0 on his personal social media. The new stablecoin will reportedly offer users an attractive 20% APY, fully subsidized by Tron.
This announcement follows the previous incarnation of USDD, which encountered difficulties and was ultimately delisted from major cryptocurrency exchanges.
In 2022, USDD initially offered a substantial 30% APY, which was later reduced due to market challenges. Additionally, last August, the Tron DAO Reserve withdrew about 12,000 Bitcoin from USDD’s collateral without prior approval from its DAO.
This action shifted the stablecoin’s backing predominantly to Tron’s native token, TRX, raising concerns regarding the asset’s stability and transparency. Most significantly, the stablecoin lost its dollar peg on several occasions over the past two years.
As a result, USDD still serves as a cautionary tale of Sun’s failures in the crypto community. So, the community isn’t wrong to question the new project. Nonetheless, the company is trying again.
“USDD 2.0 is about to launch with a 20% APY, fully subsidized by Tron. All interest will be sent in advance to a transparent address. There’s no other reason—it’s simply because we have plenty of money. So, stop asking me questions like ‘where does the yield come from,’” Sun stated.
To be fair, these claims of 20% APY on a stablecoin are concerning. Sun certainly controls vast capital resources; he invested $30 million into Trump’s World Liberty Financial in late November. However, if Tron pays out USDD users from its own cash reserves, it’s unclear how the company would actually profit.
Tron’s native token TRX hit an all-time high about a month ago, but its volatility might not be sustainable enough to back a stablecoin. In fact, TRX has endured a steady decline in the intervening weeks, although dedicated investors are showing resilience.
Potential investors have many questions before trusting Tron to recreate USDD. Whether or not the company has enough money to subsidize this launch, it simply can’t shovel money into the project forever. At some point, the company will need to actually benefit from an offer that seems too good to be true.
