VIP-XX (TBD) Support USDD on Venus

Support USDD on Venus

Rationale

The USDD team and I would like to suggest adding support for USDD on Venus as a collateral asset. The addition of USDD as an asset for lending and borrowing would create new lucrative options for Venus users, especially those interested in earning on stable assets.

Summary

This is a proposal for adding borrow/lend support for USDD on Venus. This way USDD, a decentralized stablecoin on the ETH,TRON, BNB chain and many more to come, will play an important role on Venus and add value to its community.

Motivation

Venus is a decentralized marketplace for lenders and borrowers with borderless stablecoins. Adding USDD to Venus will increase the demand for USDD and establish an additional use case for this decentralized stablecoin. We also believe that adding the USDD market to Venus protocol will expand the range of markets that Venus Protocol supports which will drive utilization and adoption of Venus further.

USDD Background

USDD (Decentralized USD) is a decentralized algorithmic stablecoin launched on TRON, Ethereum, and BNB Chain and issued by the TRON DAO Reserve with a stable price and diverse use cases. It will have a built-in incentive mechanism and a responsive monetary policy, which will allow USDD to self-stabilize against any price fluctuations and help consolidate the value of USDD as a true settlement currency. The decentralized USDD stablecoin will free holders from any arbitrary impositions of central authorities and eliminate all entry barriers and effectively safeguard private property rights.

USDD will propel stablecoins to enter a new era where mathematics and algorithms lay the foundation for financial accessibility and stability in a decentralized manner.

Initial Stage of USDD Decentralization

Firstly we have a token type called TRC10 token, which is a native token type (think of the logic for native ETH on Ethereum). USDD is a TRC10 token as defined by tron-network in system by code.

Secondly, all TRC10 USDD tokens have been transferred to an issuance Contract controlled by 7 wallets, which can be audited by the community. Any USDD released by this contract has a 10-day timelock if more assets are needed with a 5/7 multisig.

Thirdly, after the release day, signers are able to decide to move the fund to an authorized contract, which means the USDD in the authorized contract is ready to be released into circulation. So, if whitelisted institutions need to mint USDD, they need to burn their TRX to TRX Burning Contract. After signers monitor and contact the whitelisted institution for proof of the TRX burning, signers will transfer USDD to the whitelisted address with 5/7 mutisig.

Price Stability of USDD

The USDD market follows the simple law of supply and demand for a pegged currency. Once the system detects the deviation of the USDD price from its peg, it takes countermeasures to normalize the price. These measures are:

● Contracting the money supply will result in a higher relative price level. When the USDD price level is below the target, a reduction in the USDD supply will bring the price level back to normal.

● Expanding the money supply will result in a lower relative price level. When the USDD price level is above the target, an appropriate increase in the USDD supply will bring the price level back to normal.

As we know it, the contraction of money supply incurs costs like any other asset. When the USDD price falls below the target, USDD users can choose to burn their USDD to mint TRX, which brings the USDD price back to the target level.

USDD Adjustment Mechanism on short-term price fluctuation

The USDD protocol runs on the TRON network, of which TRX is the native token and the most natural defense against USDD price fluctuations. The USDD protocol uses TRX as the base currency to price USDD. The USDD protocol maintains the market price of USDD around the target price regardless of market conditions using the following method:

● When USDD’s price < 1USD, users and arbitrageurs could swap 1USDD to 1USD worth of TRX in the protocol.

When 1USDD = 0.9USD, an arbitrageur can buy 1USDD with 0.9USD in the external market and then swap 1USDD for 1USD worth of TRX in the system. After that, the arbitrageur can sell 1USD worth of TRX in the external market at 1USD. In this way, the arbitrageur spends 0.9USD to get 1USD, and earns 0.1USD without taking any risks. As a result of the above arbitrage, 1USDD will be burned, and 1USD worth of TRX will be minted. As the supply of USDD decreases, USDD’s price will increase, to the point where there is no room for arbitrage and 1USDD re-equates to 1USD.

● When USDD’s price > 1USD, users and arbitrageurs could swap 1USD worth of TRX to 1 USDD in the protocol.

When 1USDD = 1.1USD, an arbitrageur can pay 1USD for TRX of the same value in the external market and then swap 1USD worth of TRX for 1USDD in the system. After that, the arbitrageur can sell 1USDD in the external market at 1.1USD. The arbitrageur spends 1USD to get 1.1USD and earns 0.1USD without taking any risks. As a result of the above arbitrage, 1USD worth of TRX will be burned, and 1USDD will be minted. As the supply of USDD rises, USDD’s price will go down, to the point where there is no room for arbitrage and 1USDD re-equates to 1USD.

USDD Rate Model

For the Interest Rate model of USDD, we suggest using the same stablecoin jump rate model as USDT BUSD USDC and DAI

[Base0bps_Slope500bps_Jump10900bps_Kink80

b=0, a1=5%, a2=109%,kink=80%]

USDD APY Model

USDD on Venus will be different from other stablecoins as it will have a steady supply/staking APY model set at 30% per annum which will be supported by the TRON DAO/USDD Team.

Liquidity on BNB Chain

The Tron DAO will make available initial USDD liquidity on Venus Protocol on top of the already existing supply on other BNB Chain pools, currently shared by PancakeSwap (Over 10M USDD and EPS (Currently 54M USDD).

Voting Options

For - I agree that USDD would be good markets to add to Venus Protocol

Against - I do not think USDD should be added to Venus Protocol

Abstain - I am indifferent to whether USDD should be added to Venus Protocol

References/Useful links

Website: https://usdd.io/
Whitepaper: https://usdd.io/USDD-en.pdf
Communities:

5 Likes

GO FOR IT ASAP! I hope that there will be more cooperation between Justin and Venus in the near future. :wink:

4 Likes

I agree! Totally! Let’s do this as soon as possible!!

3 Likes

We are living in the era of new technologies and stable coins are huge part of it,especially from well know crypto player like Justin Sun :wink:

So we clearly should support idea of our community leader and bring as much liquidity as possible to our protocol. :fist:

4 Likes

For! Stablecoins are the bread and butter of venus protocol revenue. its a positive step for the community

2 Likes

I agree that USDD would be good markets to add to Venus Protocol! USDD is such a wonderful decentralized algorithmic stablecoin!

Let’s do this ASAP!!

I really support USDD launch on Venus,

TRON is the largest blockchain growing every day,

USDD has a $250mil mkt cap with up to $10 billion backing it

Looking forward to the launch of USDD!

1 Like

Good proposal.

:100:agreed! :clap:good move

USDD is TRON‘s new algorithmic stablecoin

USDD has been already listed on several DEXs in just a few days

It’s just a beginning, USDD will become a stablecoin changer

Trust me!

Hello, Venus Community, we are from USDD team.

We sincerely suggest adding support for USDD on Venus as a collateral asset. The addition of USDD as an asset for lending and borrowing would create new lucrative options for Venus users, especially those interested in earning on stable assets.

Looking forward to the launch of USDD on Venus!
Thanks for all your support and love.

1 Like

Another Algo stable coin what could possibly go wrong…

1 Like

usdd=ust is very dangerous,do not deploy usdd。

1 Like

usdd is worthless,usdd is a threat to the safety of Venus

1 Like

(post deleted by author)

Bad timing on recommending another algo stablecoin with UST crashing and the potential exploits it causes.

I do not see the difference mechanism between UST and USDD. Shouldn’t there at least be some explanation of how we will not repeat LUNA situation? It sounds like a literal copy paste of the economics of UST except with the staking rate being fixed by the Tron team rather than by Venus protocol normally. How will that solve anything? Also, how will the borrowing rate then be set?

Dear Venus Community,

This is USDD team. Due to the recent market environment, you may have some doubts about the stability of USDD. We are glad to answer your confusion here and lead you to learn more about the decentralized algorithmic stablecoin USDD.

On May 5, USDD was officially issued and entered circulation on TRON, BNB Chain and Ethereum. As the early custodian, the TRON DAO Reserve manages USDD, ensuring price stability and decentralization by collateralizing USDD with its reserves.

Recently, the TDR has replenished its reserves several times to stabilize the market.The TDR has increased its reserves and diversified its assets to include $82,341,872 worth of BTC, $181,643,872 worth of TRX, $295,200,000 worth of USDT, among others. TRON DAO Reserve has over $10 billion in the reserve, enough to cover all the deviations now.

It will continue to attract more liquid assets and whitelist more compliant institutions on board as stakeholders to better manage USDD and guarantee its price stability.

Now, Alameda Research, Amber Group, Poloniex, Ankr, Mirana, and Multichain have joined the TDR as members and whitelisted institutions. They will also serve the role of advisors and make recommendations to develop, enhance, and provide general support to the USDD network. As more whitelisted institutions join the TDR as stakeholders, the popularity and adoption of USDD will be taken to the next level.

Another important point is that we keep focusing on the healthy growth of USDD. We want to keep our USDD market cap relatively small compared to TRX and total market cap. And also at the same time, smaller than the Tron DAO Reserve. We won’t use too much leverage. If the market collapses, the money in the TRON DAO Reserve will definitely be enough to recover.

For the liquidity providing, as of now, USDD is not only available on multiple DeFi platforms with total liquidity over $961.5M including SunSwap ($149M), SUN.io ($190M), JustLend ($500M staking and $190M borrowing), PancakeSwap ($14M), Ellipsis Finance ($62.5M), Uniswap ($15M), Curve ($31M), and KyberSwap, but also launched on centralized exchanges like Huobi, Kucoin, Poloniex with impressive trading volume.

For example, you can check the 24hr trading volume of USDD on the centralized and decentralized exchanges of total $163,599,205 volume (May 20th, 2022):
Huobi: $57,064,257
Kucoin: $49,447,620
Poloniex: $29,116,852
Sun.io: $27,970,476

We will collaborate with more centralized and decentralized exchanges to promote USDD and increase the liquidity of USDD. The current market cap of USDD is $330 million with around $150 million 24H trading volume and 961 million liquidity.

We aim to keep USDD multichain not only on TRON but everywhere. We will
provide a better way for everybody to access the market. USDD will be available on more major exchanges and wallets worldwide. Please stay tuned for more results!

Finally, we believe that the algorithmic stablecoin is important to the whole crypto world. We will keep building the strongest USDD ecosystem.

Thanks for all your supports to USDD.

1 Like

I don’t want to be rude or pessimistic, but why would algo stablecoin be important? Important for who? For what? To be yet another failure? We have good stable coins available in any quantities we need like USDT or BUSD, why would we use an algo stablecoin, which cannot go over 1 but can go down to zero?

I expected UST would have stopped the trend of trying to create money out of thin air, after the failures of BasisCash, BDO and all other algo-stable, but it looks $30B of losses weren’t enough for a lesson.

It’s irrelevant to look at the volume, yield or liquidity, UST had gigantic ones, if your token is backed by 1B and you have 10B supply, so it’s worth 0.10 and not more. That’s the maths and you cannot override them. Many countries, bond issuers, central banks, tried over time and failed, because it just doesn’t work.

May Venus add it, please use a reliable Oracle and low collateral factor, for the day it drops from 1 to 0.2 intraday.

1 Like

A lot of users still want answers about the last ama with Justin sun.

Just because Denny is friends with him doesn’t mean that we should blindly put whatever he suggests into the protocol.

The last ama he did, he talked about everything but Venus. Then the price pumped to 20 appearing to be an exit for someone as it immediately dumped.

I vote against ever getting involved.

2 Likes

I agree. Sun is a scammer so why facilitate this scams? Vote no.

2 Likes

USDD has already lost its peg. At least it was quick. And don’t blame arbitrage, short-sellers or speculation because it’s all part of the game, a stablecoin should be strong against those attacks. USDT, DAI and others are.
That’s because algo stablecoins just don’t work.