USDD Minting 101: Vault vs PSM
Which One Fits Your DeFi Strategy?
When minting USDD, you actually have two different paths and each one serves a different DeFi style.
It’s not about which is better. It’s about what fits your goals.
🔹 1️⃣ Vault Route (Collateralized Minting)
This method allows you to deposit USDT as collateral and mint USDD against it.
How it works:
Deposit USDT into a Vault
Maintain a minimum collateral ratio (around ~101%+ depending on parameters)
Monitor stability fees and liquidation thresholds
Best for:
Active DeFi users
Yield farmers
Traders who want capital efficiency
Long-term strategists comfortable managing risk
Risk factor:
Market volatility can impact your collateral ratio. If it falls below the minimum, liquidation risk increases. Active monitoring is required.
✔ More control
✔ Potential leverage opportunities
⚠ Requires risk management
🔹 2️⃣ PSM Route (Peg Stability Module)
This is the simple path.
You swap USDT or USDC directly for USDD at a 1:1 ratio (when liquidity is available).
Features:
No collateral ratios
No stability fees
No liquidation risk
Instant conversion
Best for:
Quick stablecoin swaps
Hedging
Low-risk DeFi participants
Users who prefer simplicity
Catch:
Availability depends on pool liquidity.
✔ Fast
✔ Predictable
✔ Low friction
🎯 So Which One Should You Choose?
It depends on your DeFi personality:
Team Vault → More control, potential upside, but requires active management.
Team PSM → Speed, simplicity, and straightforward stablecoin access.
DeFi works best when you understand the mechanics. Once you do, you can choose the route that aligns with your strategy and risk tolerance.
Which side are you on — Vault or PSM? Let’s discuss 👇
#USDD #USDD2