Recently, some friends have been asking about USDD. After asking around, the answers are still the same old three: decentralization, 1:1 peg, algorithmic stability. To be honest, these buzzwords no longer carry much persuasion. If you ask me, the key is to understand why it was designed this way and what specific use cases it can serve.

Let's start with its positioning. USDD did not follow the aggressive algorithmic stablecoin route; instead, it chose a relatively conservative architecture of decentralization combined with over-collateralization. At first glance, it might not seem very sexy, but think about it—given the premise of abandoning centralized custody, achieving stability and transparency to a verifiable degree is not easy.

This approach is completely opposite to those early radical stablecoins. Those projects aimed to maximize capital efficiency at all costs, but the risks were also pushed to the limit. USDD clearly takes a different path.

Regarding over-collateralization, many people misunderstand it. It’s not just about "locking in a bit more assets"; the real significance lies in reserving a safety buffer for extreme market conditions. You can think of it as an insurance cushion on the chain—when prices fluctuate wildly, the system has room to maneuver without exploding instantly. The cost? It does sacrifice some capital efficiency. But what it gains is greater predictability, which is actually a scarce commodity in the DeFi world.

Now, let’s look at its use cases. USDD is not meant to exist independently; it’s clearly designed to serve the entire DeFi ecosystem—liquidity mining, lending protocols, cross-protocol settlements. These scenarios all require a stablecoin with high transparency, clear rules, and low likelihood of issues. From this perspective, USDD is more like infrastructure rather than a speculative asset.

What I appreciate is that it doesn’t attempt to "revolutionize" stablecoins but rather improves on existing paths by ensuring decentralization, auditability, and composability above a passing threshold. It may sound ordinary, but often, the most ordinary things are the most durable.

USDD’s selling point isn’t about being the most exciting, but about being genuinely practical. It may not have the fastest growth rate, but in today’s environment—where risk control and compliance boundaries are increasingly emphasized—this kind of foundational, stable stablecoin is more likely to endure longer.

As for whether it’s the optimal solution, that’s for the market to verify. But as a utility asset within DeFi, USDD at least represents a logically consistent and clearly directed choice.