protos.com
USDD, the TRON-based stablecoin founded by Justin Sun, has recently launched a new vault, SA001-A, also called the “Smart Allocator.”
This vault has immediately grown to hold approximately $260 million in collateral, approximately 61% of the total collateral for USDD, and all of these assets came from Sun-advised HTX.
This vault places assets into lending protocols to help subsidize the yield paid by USDD, currently 20%. The vault is currently depositing in AAVE and Sun-founded JustLend.
However, the vault’s launch raises serious questions about how USDD is governed, where its assets are coming from, and the role of Sun.
No USDD governance
USDD’s governance page claims that “The governance framework of the USDD ecosystem is designed to be community-driven and decentralized, ensuring inclusivity, transparency, and adaptability.”
It continues, “Governance empowers stakeholders to make critical decisions regarding the protocol’s future, stability, and growth.”
Additionally, the FAQ for this project claims that “USDD is governed by a decentralized community where users actively participate in the protocol’s decision-making process. This ensures that no central authority controls USDD.”
Furthermore, USDD claims on Medium that the asset platforms for the so-called “Smart Allocator” are “selected by USDD and JUST DAO teams based on strict risk controls.”
Read more: USDD’s TRON DAO Reserve shuts down its DAO
Despite this claim, a review of the JUST DAO does not include any votes related to the launch of this vault.
There are actually no governance votes related to USDD at all. Nor is there any evidence of any decentralized governance for USDD at all, despite the repeated claims that it exists.
USDD funds from HTX
Further raising concerns is the source of the funds that have been placed into this vault.
The funds that were deposited into AAVE came from 0x18709E89BD403F470088aBDAcEbE86CC60dda12e, an HTX address. HTX is an exchange advised by Sun.
The funds that were deposited into Sun-founded JustLend initially came from TDToUxX8sH4z6moQpK3ZLAN24eupu2ivA4, another HTX address.
Read more: Justin Sun stored USDD reserves at HTX for proof-of-reserves
These transactions come a couple of weeks after HTX engaged in a strange series of AAVE transactions in which it briefly withdrew huge quantities of funds, spiking rates, before returning most of the funds to AAVE.
Broadly, the lack of decentralized governance and the provenance of funds coming from Sun-advised HTX raise serious concerns about Sun’s role in USDD.
Protos reached out to USDD to determine why there was no governance vote related to the launch of this vault, but it did not immediately respond.