TRX has become a literal Ponzi scheme, and is following a hybrid playbook from SBF, Clesius and Do Kwon. I still see people talk about this like it's a regular shitcoin, it's not. Since USDD was launched in 2022 it's become a direct scam.

USDD is a ponzi scheme which is slowly unraveling in the background. It's a textbook flywheel and I have no idea why people aren't talking about it. Especially given Justin has a history of rug pulls and scams.

USDD was launched by Justin Sun after the collapse of Terra Luna. It's an algorithmic stablecoin paying unsustainable APY and it's backed by, you guessed it, TRX.

Users deposit TRX into the burn contract and are issued equivalent USDD based on the spot value of the TRX. It's even better as he used the money from USDD to purchase an exchange which holds huge amounts of genuine user funds, anybody remember something else like that recently?

So let's look at USDD. How did they incentivise cash to get locked into the protocol? They offered 40% APY on Justin's newly purchased exchange Huobi. Two times the interest rate of a high interest credit card. As they've continued draining user funds they've been lowering that APY to keep the ponzi running, they're currently paying 15.5% APY, still significantly higher than the deposited money can earn, and more than enough incentive to keep genuine cash wrapped up in the system until the death spiral. When people begin withdrawing they start pumping the APY again to kick the can down the road.

The coin is meant to be 'over collateralised'. At the start on paper it was 'over collateralised' to the tune of 210%! The DAO guarantee 120% total backing, and right now despite the huge market uptick we're sitting at 175%. That's a 35% drop in on paper overcollateralisation since launch, against the backdrop of a crypto market that's surged 60%. That means in reality close to half the cash has already been drained.

But the situation is actually much worse, because when it started a third of the money (on paper) was USDC (it wasn't really, this was another layer to the scam but it's irrelevant right now). 100% of the stables have been drained and exchanged with more TRX. They have 4 dollars in USDT and that's the total of their remaining stable coin collateralisation.

Every other dollar in USDD is now in BTC and TRX, and I think you can guess which of these makes up the lions share of the 'over collateralisation'. On paper they have 1.2b in assets backing 750m in issued coins, with 775m in TRX making up the bulk of that. For a time they can do what they've been doing and use unbacked USDD to buy TRX in order to maintain the price of that asset until the collapse, but as with any scam it can't go on forever. It will keep running until one of the following happens

​

1. TRX price collapses (difficult as it's being flywheeled through the USDD and customer funds, this is how it somehow defied the bear and drew users in)
2. BTC price drops and causes lack of collateralisation, or BTC stops growing fast enough to offset the drain
3. Justin finishes draining everything he can and disappears to a private island

It could make it a year, it could make it two, or it could get wiped out in the next week - in either case it will get wiped out, it's just a matter of who gets left holding the bag. My guess is Huobi customers.

TL;DR USDD is a hybrid scam based on all the others we saw last year. 95% of the 'money' in USDD is Justin Sun and co. The APY mill is an exchange Justin Sun owns, most likely paying the APY from genuine users funds, and Justin is using those funds to purchase his TRX and make hundreds of millions of dollars in exit liquidity without instigating a sell off.