Market capitalization for the enormous stablecoin USDD, which calls itself “algorithmic,” is close to $730 million. Nevertheless, there are other problems with it, ranging from its design to its reserves and its partners, despite its size and seeming significance.
The original intent of USDD’s introduction was to include an algorithmic architecture similar to that of the Luna-Terra system. According to the initial whitepaper, Tron version 5.0 would include USDD minting and redeeming into the protocol’s core by the end of 2022. But Tron 5.0 is still not out as of this writing.
While the original intent of this version was to physically “burn” the tron (TRX) used to create new USDD, the current practice is to store the “burned” TRX in a wallet and use it as collateral for the token.
Whitepapers for USDD published after the Luna-Terra system collapsed remove all reference to USDD’s integration with Tron’s core. Furthermore, at this time, there is no established way to redeem USDD.
The Protos team has contacted Tron Network and USDD to inquire about the release date of version 5.0 and the possibility of USDD integration in the original whitepaper’s outlined method.
The Tron DAO Reserve (TDR), which is in charge of USDD, isn’t quite a decentralized autonomous organization (DAO), despite what you may expect.
The governance page displays only one proposition throughout the protocol’s history. Despite seeming to contradict the meaning of the term “burned,” this proposal permitted the TDR to use the ‘burned’ TRX.
None of the ideas address the following: the holding of reserves; the changes in the protocol’s direction; or the addition or removal of specific partners for TDR.
The reasons for the current holding of these monies are not addressed in any of the governance ideas. Protos tried to get HTX and TDR to explain the reasoning for the current holding of these money, but they failed to do so. There has been no security issue on the platform in the previous 10 years, contrary to what HTX said. When pressed further on the previously reported security problems, HTX restated its stance that nothing had happened.
Since USDD seems to have given up on its aim of incorporating issuance directly into Tron’s core, it is more dependent on the TDR partners to oversee token issuance.
Many of the product’s associates have run into serious problems; for example, the now-defunct Alameda Research was involved in the theft of billions of dollars from FTX customers under the ownership of financial crook Sam Bankman-Fried.
A member of the other partnership, Justin Sun, is a “advisor” to HTX and a USDD proponent who also runs the exchange Poloniex. Even though it committed to complete the proof-of-reserves, Poloniex is still keeping mum about how much money is in its WBTC on Tron offering, which accounts for a significant chunk of the “bitcoin” on HTX.
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