As the stablecoin market surpasses $2.5 trillion, competition is becoming increasingly fierce. The USDD stablecoin, launched by TRON founder Justin Sun, officially went live on the Ethereum network on September 8, 2025, marking a new challenge to the mainstream stablecoin market. USDD not only introduces a Peg Stability Module (PSM) for seamless exchange with USDT and USDC but also attracts early users with an annual percentage yield (APY) of up to 12%, attempting to carve out a share in Ethereum's $165 billion stablecoin market. However, facing Tether's dominant market cap of $169 billion, USDD's scale and influence still face significant challenges.
Release and Incentive Mechanism of USDD
USDD is an over-collateralized algorithmic stablecoin, initially launched on the TRON blockchain, designed to maintain a 1:1 peg with the US dollar through algorithmic mechanisms while providing high on-chain yields. Its Ethereum contract has been audited by CertiK and officially launched on September 8. The newly introduced Peg Stability Module (PSM) allows users to directly exchange USDT and USDC at a 1:1 ratio, ensuring efficient liquidity and price stability.
To attract Ethereum users, USDD launched an airdrop event on September 9, offering tiered yield rewards. The initial annual yield is as high as 12%, which will gradually decrease to 6% as adoption increases. Users can claim accumulated rewards every eight hours through the Merkl dashboard. Additionally, USDD plans to launch an interest-bearing version, sUSDD, which will generate passive income directly on-chain, seen as the beginning of its multi-chain expansion strategy.
Justin Sun enthusiastically declared on the X platform: "From now on, everyone has a decentralized choice in stablecoins! USDD is growing! Exchange USDD, participate in mining activities, with an annual yield of up to 12%!" This slogan highlights USDD's ambition to attract users through high yields and decentralized features.
The collateralization rate of USDD currently stands at 204.5%, primarily supported by TRX tokens. Previously, Justin Sun withdrew $726 million worth of Bitcoin collateral in August, indicating his reliance on TRX. Although the high collateralization rate aims to withstand market fluctuations, USDD's stability has been tested. During the Terra collapse in 2022, the price of TRX fell to $0.983; during the FTX collapse the same year, TRX further dropped to $0.97. These events exposed USDD's sensitivity to TRX price fluctuations.
Tether's Dominance and Intensifying Market Competition
Tether (USDT), as the absolute leader in the stablecoin market, firmly holds the top position due to its strong liquidity and global settlement coverage. On the TRON network alone, the daily transfer amount of USDT reaches $23 billion to $25 billion, while the transfer amount of USDT on Ethereum is about $20 billion. The circulation of USDT on TRON is approximately $80 billion, while Binance controls about $44 billion in stablecoins, accounting for two-thirds of the exchange's reserves. Tether's solid position makes it a benchmark in the stablecoin market.
However, competition in the stablecoin market is rapidly heating up. The supply of stablecoins on Ethereum has reached $165 billion, with new players continuously emerging. MetaMask plans to launch mUSD, Paxos issues USDH with revenue-sharing features, and EURC and PYUSD have also seen rapid growth. Additionally, the evolving regulatory environment provides opportunities for new entrants. The EU's MiCA regulations and the US's GENIUS Act open doors for compliant stablecoins, while Asian markets (such as Singapore, Hong Kong, and Japan) are also developing clearer regulatory frameworks to attract institutional adoption.
Challenges and Future of USDD
Despite USDD improving liquidity on Ethereum through the PSM module, its market cap is only $450 million to $460 million, about 0.3% of Tether's, indicating a significant scale gap. Furthermore, USDD's reserves are highly dependent on TRX, making it vulnerable to price fluctuations, and its liquidity depth lags behind USDT and USDC. To establish a foothold in the competitive market, USDD needs to address the following key issues:
Enhancing Liquidity: Although the PSM module has improved exchange efficiency, USDD's liquidity depth still needs to be further expanded to match the trading volumes of Tether and USDC.
Diversifying Collateral: The current over-reliance on TRX increases systemic risk; introducing a more diversified collateral mix will be key to ensuring long-term stability.
Embedding Real Economic Use Cases: USDD needs broader ecosystem integration, such as in payment, DeFi protocols, or cross-border transaction scenarios, to enhance its practical application value.
Conclusion
Justin Sun's USDD, through its launch on Ethereum and high-yield incentive mechanisms, demonstrates an ambition for further expansion in the stablecoin market. However, in the face of Tether's strong dominance and increasingly fierce market competition, USDD's success relies not only on technological innovation and incentive measures but also on establishing deeper liquidity, diversified collateral support, and widespread practical application scenarios. In the future, whether USDD can stand out in the $2.5 trillion stablecoin market remains to be seen and will require time and market validation.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
