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.
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.
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 (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.
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.
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.
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.
For the Interest Rate model of USDD, we suggest using the same stablecoin jump rate model as USDT BUSD USDC and DAI
b=0, a1=5%, a2=109%,kink=80%]
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.
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).
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