Tron Founder Justin Sun Introduces Controversial New Product! "We're Doing It Because We Have a Lot of Money"

Tron (TRX) founder Justin Sun announced that the latest version of Tron’s algorithmic stablecoin, USDD 2.0, which promises a striking annual percentage yield (APY) of 20% to be fully subsidized by the Tron DAO, will be launched soon.

In a post on X (formerly known as Twitter), Sun addressed doubts about the source of the stablecoin’s returns, saying, “All interest will be sent to a transparent address in advance. There is no other reason, it’s just because we have plenty of money. So stop asking me questions like ‘what is the source of the return.’”

USDD was first launched in 2022 as a competitor to Terra’s now infamous UST stablecoin. Unlike the collapsed UST amidst market turmoil, USDD survived and continues to be largely supported by Tron’s native token TRX. It is reported that USDD is governed by the Tron DAO, which oversees its reserves and operations.

Algorithmic stablecoins like USDD aim to be pegged to the US dollar using crypto-backed mechanisms, but they have faced criticisms compared to cash-backed counterparts like USDC and USDT. Analysts expect the stablecoin market, which has a value exceeding 215 billion dollars, to more than double by the end of the year.

USDD, including Bluechip, a platform that evaluates stablecoins, also received its share from critics. Last year, Bluechip gave the lowest stability ranking to USDD and expressed concerns about its dependency on TRX as a supporting asset and the lack of a transparent governance system:

“USDD has no governance system. USDD holders have no legal or code-based protection and are at the mercy of the Tron DAO Reserve.”

The Stablecoin website claims that USDD is backed by over $2.6 billion in assets, mainly TRX tokens, with an over-collateralization ratio of 120%.