Duo Nine | YCC Profile picture
May 28 β€’ 20 tweets β€’ 11 min read
1/ #USDD is NOT a stablecoin! WHAT? 😲

Here's my review of the USDD cryptocurrency on #Tron network. #TRX

Read the above again. This is the label they used for USDD in their whitepaper!

A clear red flag & there are more.

You asked & I delivered. A thread. 🧡

πŸ‘‡πŸ‘‡πŸ‘‡
2/ What is #USDD?

USDD is a cryptocurrency native to #Tron network.

This is nothing big on its own.

However, if you thought USDD was a regular stablecoin, I got a surprise for you. πŸ‘‡
3/ Check out this abstract from the USDD whitepaper.

Highlights are mine.

Let me dissect that for you in more detail below.

There is a reason the whitepaper is so... vague.

It's pretty obvious what's going on. πŸ‘‡
4/ "a cryptocurrency issued by Tron DAO Reserve"

This means it is centralized, full stop. Don't be fooled.

Look at Terra/Luna if you are in doubt (see link).

The Tron DAO has some clear members calling the shots.

Let's check them out. πŸ‘‡

5/ Whenever you read USDD is decentralized it means these "members" are in charge of it (see pics).

The Tron DAO Reserve is controlled by them and so is USDD issuance & burn.

If you hold USDD, you in effect trust these entities with your money.

Not convinced? πŸ‘‡
6/ The only thing decentralized about USDD is the Tron network.

The rest is about the above members sitting down & deciding "monetary policy" for USDD.

That is their whitepaper language, not mine! 🀣

Let us check the peg mechanism next... now we get to the juicy stuff. πŸ‘‡
7/ "a cryptocurrency [...] with a stable price"

Nowhere in the whitepaper do they say that #USDD should be pegged to the USD at a 1:1 rate.

NOWHERE!

USDD could very well be "pegged" to the USD at 10 cents in the future & it would still work as intended!

Wait, what? πŸ‘‡
8/ They do explain how the peg mechanism works, it is similar to Luna. 🀣

But the peg rate could be any: $1, 50 cents, 10 cents... or 0.

Users & arbitrageurs "can" choose to re-peg, or not! πŸ˜…

This is where things get fuzzy & funny! πŸ‘‡
9/ We have little info on #USDD backing.

The USDD "reserve" did buy some USDT + BTC to "defend" the peg.

Do they have enough in the reserve to back USDD? Probably not.

But this is fine so long TRX market cap > USDD mcap.

If not, see UST. Next πŸ‘‡

10/ Today's USDD mcap is 0.6 bil vs Tron's 7.7 bil mcap.

Not bad.

But I'd be very careful once USDD mcap is more than half of TRX mcap.

So why even do this, what do those "DAO members" gain? What's the incentive?

Leverage, arbitrage & market share! πŸ‘‡
11/ First, they can issue USDD against TRX market cap without backing. Yay free money!

This is similar to what Do Kwon did with UST, then bought BTC for free!

But they need to be careful as they can crash USDD/TRX if they leverage too high.

Next πŸ‘‡

12/ Second, only these DAO members "manage" the peg mechanism & can make a lot of profit from it.

Every time USDD goes above or below $1, they stand to profit.

If it goes too low, will they save the peg? For UST, $3 bil was not enough to save it.

What about the USDD users? πŸ‘‡
13/ To boost USDD market share (= pump TRX + leverage more), the "Tron DAO" gives incentives to users.

Sun.io USDD & USDT pool has 30% APY at the time of this post.

Not bad, but the risks are clear.

If USDD mcap gets too big = crash. 🀯

What should you do?
14/ Understand that USDD market cap is basically a leverage position on the ENTIRE Tron ecosystem!

See Terra / Luna crash for more (video)

If they get greedy, as Lunatics did, it will end in disaster for all involved

Plus, remember the whitepaper? πŸ‘‡

15/ To me, they have NO OBLIGATION to keep the peg at 1:1 with USD.

Even the title of their whitepaper is "Decentralized Stablecoin Protocol"

That can mean ANYTHING.

Don't be fooled or get too greedy, it may cost you. πŸ‘‡
16/ USDD is neither decentralized nor a safe stablecoin.

These labels mean little so long there is no transparency on its backing or the "USDD DAO" decisions.

Check out my guide on stablecoins to learn more.

Next πŸ‘‡

17/ Do your due diligence!

USDD may offer a juicy +30% yield, but is that worth the risks?

Are you comfortable with losing all your money?

This is exactly what happened to #UST + all token holders across the entire Terra ecosystem!

My risk assessment on USDD is next. πŸ‘‡
18/ Calling #USDD a stablecoin is very misleading & risky!

Calling it a cryptocurrency is much better, as per their whitepaper. 🀣

If you are a degen, you can farm that yield no questions asked.

Just get out early & don't look back once USDD mcap grows too big.

Finally πŸ‘‡
19/ If you liked this thread, #retweet the first post to get more of this content in the future! 😍

Stay in touch + follow @DU09BTC:

Discord: bit.ly/3n2gng0
TradingView: bit.ly/3FUjwHj
YouTube: bit.ly/3p8vPdf
Newsletter: bit.ly/3MUpkna
Retweet for more content like this! πŸ‘‡πŸ‘‡πŸ‘‡

Thank you!

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More from @DU09BTC

May 19
1/ On March 28 I made a thread on the top 10 reasons why we are in a bear market using stablecoin charts.

The only divergent signals (opposing this view) were from #UST & #USDT.

What happened since?

#UST went to 0 & #USDT lost $9 bil in mcap.

Next πŸ‘‡

2/ All reputable stablecoin mcaps were falling (#USDC, #DAI, #LUSD), except UST and USDT.

USDT has now corrected this divergence and is falling in the trend (pic).

UST was not so fortunate and crashed to 0 with more algo stables following the same trend: #USDN, #DEI.

Next πŸ‘‡
3/ UST did not have the backing to account for its mcap, hence it went to 0.

Why so bad? Because of a death spiral:

Buy 1 UST, burn it for Luna, sell Luna for $1. With $18 bil UST to burn for Luna, this crashed Luna's price to 0 and UST followed soon after.

Next πŸ‘‡
Read 9 tweets
May 9
There is $100 mil in Curve left to exit from UST.

Binance bids at $0.98 are being replenished with $10-20 mil every few min.

So far their defense looks solid.

Unlikely Do Kwon pockets can absorb hundreds of millions of sales per hour.

That is money he is losing/hour.
Ok, they ran out of money already, lol.
They refilled it. I suspect they may start selling Luna if they run out of cash... Luna is under $50 already... wtf.
Read 4 tweets
May 9
1/ Time to dispel the myths around #Terra / #Luna / #UST once & for all!

Is it decentralized? Is UST a stablecoin? Is it #SAFU?

What are the alternatives???

Are you with me?

Here's the thread you've been waiting for. πŸ‘‡
2/ Before I debunk the most important myths about Terra, I suggest you check my earlier thread on this to understand the context better.

Ready? Let's start with myth number 1. πŸ‘‡

3/ Myth number 1:

🚨 "Terra / Luna / UST is decentralized."

Verdict: FALSE ❌

I can explain, lets's look at the Terra / Luna network first and then UST. πŸ‘‡
Read 21 tweets
Apr 18
1/ You no longer have to trust anon FUD on Twitter about #UST

You can now trust the well respected Wall Street Journal @WSJ

Here are the key points in their article that should raise your eyebrows. πŸ‘€

UST is on a thin line as its founder fights the SEC in court.

A thread πŸ‘‡
2/ Exhibit 1:

"A new breed of cryptocurrencies is seeking to replicate the stability of the dollar. But critics say they are a disaster waiting to happen."

They mean #UST and DAI+BUSD/Paxos fudding UST.

Next πŸ‘‡
3/ Exhibit 2:

"...algorithmic stablecoins aren’t necessarily backed by any assets at all. Instead they rely on financial engineering to maintain their link to the dollar. Some have failed, saddling investors with losses."

Is UST backed? Nope.

Next πŸ‘‡
Read 16 tweets
Apr 15
1/ Time to look at the main stablecoins, including people's favorite #UST which looks rather weak.

There is one undisputed winner, despite any criticism.

The reason? Adoption, liquidity, and volume.

The rest are kings in their niche. A thread πŸ‘‡

#USDT #USDC #BUSD #DAI #UST Image
2/ Ranking by market cap is easy (see pic), but that barely says anything.

What is more important is volume and where this volume comes from!

Let's do a ranking by 7-day volume divided by mcap.

See next tweet for the results. πŸ‘‡ Image
3/ WoW look at that #UST adoption... barely any. Even DAI looks better.

1. #USDT = 4.78 (392 bil volume / 82 bil mcap)
2. #BUSD = 1.59 (27 / 17)
3. #USDC = 0.58 (29 / 50)
4. #DAI = 0.28 (2.5 / 9)
5. #UST = 0.20 (3.4 / 17)

Clearly, USDT and BUSD are in their own class.

Why? πŸ‘‡
Read 18 tweets
Apr 12
1/ Daily Anchor Yield Reserve Update. A thread. 🧡

65 days left. 😱

Important poll in tweet #4.

Link for more juicy details at the end of this thread. πŸ‘‡
2/ On track to hit 0.
3/ The total TLV in Anchor is falling by a few billions.

I wonder what caused it?

#Luna's price crashing maybe? πŸ˜…
Read 6 tweets

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