Justin Sun, the founder of TRON and a prominent figure in the crypto space, announced the native deployment of USDD—TRON’s overcollateralized algorithmic stablecoin—on the Ethereum blockchain on September 8, 2025.
This move marks a significant expansion for USDD, which was originally launched on TRON in May 2022 by the TRON DAO Reserve, just before the infamous TerraUSD (UST) collapse that shook the stablecoin market. The Ethereum integration aims to leverage the network’s massive DeFi ecosystem, where stablecoin supply has recently hit a record $165 billion, to boost adoption and challenge established players like Tether (USDT) and USD Coin (USDC).
USDD is designed to maintain a 1:1 peg to the US dollar through overcollateralization and algorithmic mechanisms, backed primarily by TRON’s native token (TRX) after Sun removed approximately $726 million in Bitcoin collateral in August 2024.
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At launch, USDD reported a collateralization ratio of 204.5%, emphasizing its overcollateralized nature to enhance stability. The Ethereum contract underwent a full audit by CertiK, a leading blockchain security firm, to address concerns about smart contract vulnerabilities.
The launch introduces several tools to facilitate seamless integration and attract users: Allows users to mint USDD directly on Ethereum and swap it 1:1 with USDT and USDC with minimal or no slippage. This mechanism is crucial for maintaining the peg and providing liquidity in DeFi protocols.
Starting September 9, 2025, Ethereum users can earn tiered rewards of up to 12% APY on USDD holdings, scaling down to 6% as adoption grows. Rewards accrue continuously and can be claimed every eight hours via the Merkl Dashboard. This incentivizes early adopters and positions USDD as a yield-bearing alternative to traditional stablecoins.
A savings version of USDD is planned, enabling users to earn interest through a decentralized system, further embedding it in Ethereum’s lending and staking ecosystems. USDD now spans 10 networks, including Binance Smart Chain (BSC), Avalanche, and Polygon, with cross-chain bridges from providers like Stargate Finance, Symbiosis, and DeBridge for interoperability.
Justin Sun celebrated the launch on X, stating: “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!” This reflects Sun’s vision for USDD as a “decentralized alternative” in a market dominated by centralized issuers.
Entering the Stablecoin Battlefield
The stablecoin sector is booming, with total market capitalization exceeding $2.5 trillion as of September 2025, driven by DeFi growth, payments, and regulatory clarity. USDD enters this arena with ambitions to rival Tether, which holds over $169 billion in market cap (about 367 times larger than USDD’s ~$450-460 million).
Ethereum alone hosts over $80 billion in stablecoin liquidity, primarily in USDT, USDC, and DAI, making it a prime battleground. USDD’s TRON roots give it an edge in low-fee transactions—TRON’s ecosystem, including SunSwap (with $3B monthly volume) and JustLend (23% YoY borrowing growth), has seen strong activity.
However, its heavy reliance on TRX exposes it to volatility risks; a TRX price drop could pressure the collateral ratio. Past events, like USDD dipping to $0.983 during the 2022 Terra collapse, highlight these vulnerabilities. While the 12% APY and PSM could draw initial liquidity (early X posts note whales accumulating), USDD faces hurdles:
Liquidity depth on Ethereum lags behind competitors, and its small market share (0.3% of Tether’s) requires rapid growth. Algorithmic stablecoins remain under watch post-Terra, and Sun’s history (e.g., SEC investigations) adds skepticism.
High yields may not last; most Ethereum protocols offer 2-5% APY, raising questions about funding sources. Despite this, the launch aligns with TRON’s multi-chain push and could benefit from Ethereum’s $165B stablecoin surge.
If USDD builds deeper integrations and diversifies collateral, it might carve a niche—especially for yield-hungry DeFi users. As one X post put it: “Stablecoin war heating up with $450M vs $169B tether dominance… Don’t fade this!” For now, it’s a bold entry, but overtaking Tether will demand more than incentives.