🔒 The core engine for price anchoring: PSM solidifies the USDD stability foundation

Under the PSM (Peg Stability Module) mechanism, USDD maintains a rigid 1:1 exchange ratio with USDC/USDT—this design naturally creates continuous arbitrage opportunities, allowing automatic adjustment of the USDD market price within the Ethereum ecosystem (including various DEXs), building a solid line of defense for its $1 price peg.

🚀 Price deviation? Arbitrage mechanisms activate instantly to stabilize

• If USDD drops to $0.998 on secondary markets like Uniswap, Curve due to short-term selling pressure, arbitrageurs will buy USDD at low prices on DEXs, then exchange it via PSM at 1:1 for USDC/USDT to earn risk-free profits; large-scale buying creates strong buying pressure, pushing USDD price back near $1.00 until arbitrage opportunities disappear.

• Conversely, if USDD rises to $1.002 on DEXs due to surging demand, arbitrageurs will mint USDD at a cost of $1 through PSM, then sell it at higher prices on the secondary market for profit; sustained selling pressure quickly pulls the price back, re-anchoring USDD to the $1 standard.

📈 Empirical data: PSM’s capacity continues to upgrade

Data on PSM fund flows over the past two quarters vividly confirms its central role in USDD’s stability:

• As of September 8, 2025 (Q3 not yet concluded), USDD’s PSM inflow reached a 117% quarter-over-quarter increase (from $1.15 billion to $2.5 billion);

• During the same period, redemption outflows also increased by 119% (from $1.24 billion to $2.7 billion).

This indicates that PSM now has the capacity to handle large-scale supply and demand fluctuations, providing ample liquidity support for arbitrageurs to quickly restore price anchoring.

🛡️ Dual-track progress in security and ecosystem expansion

• At the Ethereum version launch, the protocol completed a comprehensive security audit by CertiK, providing transparent and trustworthy security assurance for users and developers;

• The team simultaneously launched an incentive airdrop plan for the Ethereum community, adopting a tiered APY mechanism based on daily TVL snapshots (up to approximately 12% when TVL is low, gradually decreasing to 6% as TVL increases), to accelerate USDD’s initial deployment in a fair and transparent manner.

💡 Personal opinion

PSM is not merely a simple exchange tool but an intelligent stability engine that automatically maintains the peg based on “economic rationality”—when arbitrageurs’ profit-seeking behaviors resonate naturally with system stability, USDD’s anti-volatility capability will continue to strengthen as scale grows. In the future with increasingly large cross-chain liquidity, can USDD leverage the PSM mechanism to become a new benchmark in stablecoin design?

@justinsuntron @usddio_cn @usddio @DeFi_JUST
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