USDD is another algorithmic stablecoin aiming to maintain the price closely to 1 USD.
The price of USDD if increases above the peg, TRX worth 1 Dollar is minted/ burned for USDD 1, which reduces the supply TRX and increases USDD supply.
On the other hand, when the price of USDD falls, USDD 1 gets burned for USD 1 worth of TRX thus reducing the supply of USDD and increasing TRX supply.
Tron DAO is believed to be backing up USDD in times of market crash which may cause it's crash and it will accumulate Billion Dollars of Bitcoin, TRX and other stablecoins in reserve.
USDD and UST both are the algorithmic stablecoins which are not backed by any collateral. After the recent crash of UST, stablecoin investors are now skeptical of the stablcoins specially the algorithmic stablecoins.
Justin Sun was under criticism for his algorithmic framewor of USDD just like UST.
The reserve that are put aside to back up the USDD is same like the UST which also had planned of having billions of dollars reserve in LFG for the back up.
Justin Sun backs up his stablecoin that USDD has operational difference to that of UST.
Well, we don't know what the fate of USDD would be, but seeing algorithmic stablecoins not succeeding so far, and the considering the similarities of USDD and UST, it would make sense that USDD may suffer the same as UST had recently.
Now, seeing the deep pockets of Justin Sun and Tron, they do look deeper than Do Kwon and the LFG meaning that their ability of maintaining the dollar peg is likely to be higher.
But, now that here is a very public playbook of how to attack the stablecoin like this one, the chance of attacks may increase more.
