Justin Sun’s USDD Launches on Ethereum, Enters the Stablecoin Battlefield

Justin Sun’s USDD stablecoin launched natively on Ethereum as the network’s stablecoin supply hit $165 billion. The rollout adds a Peg Stability Module for direct USDT and USDC swaps and offers up to 12% APY rewards.

Despite USDD’s smaller scale versus Tether’s $169 billion dominance, the move signals growing competition in the $2.5 trillion stablecoin sector.

USDD Launch, Incentives, and Stability Test

USDD is an overcollateralized algorithmic stablecoin originally launched on the TRON blockchain, designed to maintain a dollar peg while offering high on-chain yields. Its Ethereum contract went live on September 8, following a CertiK audit. The Peg Stability Module (PSM) ensures efficient liquidity by allowing seamless 1:1 swaps with USDT and USDC.

An airdrop campaign began September 9, rewarding Ethereum users with tiered yields that start at 12% and gradually scale down to 6% as adoption rises. Rewards accrue continuously and are claimable every eight hours via the Merkl Dashboard.

As 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 that generates passive yield directly on-chain. This rollout is positioned as an opening move in a larger multi‑chain expansion.

USDD also reports a 204.5% collateral ratio. TRX mainly supports the ratio after Sun withdrew $726 million in Bitcoin collateral in August. Although this design aims to prevent destabilization, the token has faced stress in the past. It dipped to $0.983 during Terra’s 2022 collapse. It fell to $0.97 during the FTX meltdown later that year.

Tether’s Dominance and Rising Competition

Tether continues to dominate, with TRON alone processing roughly $23–25 billion in daily USDT transfers, compared with around $20 billion on Ethereum. TRON’s circulating USDT sits in the low‑$80 billion range, while Binance controls about $44 billion in stablecoins, or two‑thirds of exchange reserves. These entrenched positions give Tether unmatched liquidity and global settlement reach.

Still, the market is widening. MetaMask is preparing to integrate its mUSD, Paxos has proposed USDH with revenue‑sharing features, and EURC and PYUSD have posted rapid year‑over‑year growth. Regulatory frameworks like the EU’s MiCA and the US GENIUS Act also open the door for compliant rivals. In Asia, regulatory frameworks are also advancing rapidly, with jurisdictions such as Singapore, Hong Kong, and Japan setting more explicit rules for stablecoin issuance and oversight to attract institutional adoption.

For USDD, the uphill battle is clear. With a market cap of only about $450–$460 million in mid‑September 2025—barely 0.3% of Tether’s—its scale is limited. Liquidity on Ethereum has improved through the PSM, but depth still lags behind USDT and USDC, and reserves remain heavily exposed to TRX price movements.

Although its incentives may attract early adopters, USDD’s long‑term survival requires deeper liquidity, diversified collateral, and integrations that embed USDD into real economic use cases.