Justin Sun’s USDD stablecoin has officially launched on Ethereum, marking a major step in its expansion into the broader DeFi ecosystem. The move comes as Ethereum’s stablecoin supply hit $165 billion, and USDD seeks to challenge the dominance of Tether in the $2.5 trillion stablecoin sector.Originally launched on TRON as an overcollateralized algorithmic stablecoin, USDD went live on Ethereum on September 8 following a CertiK audit. The rollout features a Peg Stability Module (PSM), enabling seamless 1:1 swaps with USDT and USDC to ensure liquidity.To drive adoption, an airdrop campaign started on September 9, offering tiered rewards beginning at 12% APY and scaling down to 6% as participation rises. Rewards accrue continuously and can be claimed every eight hours through the Merkl Dashboard.
The decentralized stablecoin USDD has finally arrived on Ethereum! From now on, everyone has a decentralized choice when it comes to stablecoins! USDD is growing! Swap for USDD and join mining activities with up to 12% APY! https://t.co/BnOdt3ZfHL— H.E. Justin Sun 👨🚀 (Astronaut Version) (@justinsuntron) September 8, 2025
Justin Sun wrote on X: “From now on, everyone has a decentralized choice when it comes to stablecoins! USDD is growing! Swap for USDD and join mining activities with up to 12% APY!”
Planned upgrades include sUSDD, an interest-bearing version designed to generate passive yield on-chain, as part of a larger multi-chain expansion.
Collateralization and Stability Challenges
USDD reports a 204.5% collateral ratio, largely supported by TRX after Sun withdrew $726 million in Bitcoin collateral in August. Although designed to prevent destabilization, USDD has faced stress before, dipping to $0.983 during Terra’s collapse in 2022 and $0.97 during the FTX meltdown.
While liquidity on Ethereum has improved through the PSM, reserves remain heavily reliant on TRX price stability, raising concerns for long-term resilience.
Tether’s Market Dominance and Competition
Tether (USDT) continues to dominate with around $169 billion in circulation, processing $23–25 billion daily on TRON alone. By comparison, USDD’s market cap in mid-September 2025 stood at $450–$460 million, just 0.3% of Tether’s supply.
The competition is growing, with MetaMask’s mUSD, Paxos’ USDH, and stablecoins like EURC and PYUSD rapidly expanding. Regulatory frameworks such as the EU’s MiCA and the US GENIUS Act, along with Asian hubs like Singapore, Hong Kong, and Japan, are also creating fertile ground for compliant stablecoin issuers.
Outlook for USDD
USDD’s expansion to Ethereum demonstrates strong ambition but its survival will depend on securing deeper liquidity, diversified collateral, and integrations that embed USDD into real-world use cases. Incentives may attract early adopters, but analysts suggest that long-term success requires proving resilience beyond promotional yields.
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