Author: Bob, Plain Language Blockchain

In the current market where USDT and USDC dominate, most people's attention is focused on centralized stablecoins, but the importance of decentralized stablecoins is often underestimated. Leading institutions like A16z and Messari have clearly pointed out in multiple reports that decentralized stablecoins are the cornerstone of the DeFi ecosystem, and their irreplaceable role deserves our high attention.

Recently, it has been noted that the decentralized stablecoin USDD has been deployed on the Ethereum network while launching a 12% reward campaign, which has received a warm response from the crypto community. As a "dark horse" in the decentralized stablecoin market, USDD has maintained long-term stable operation and growth since its launch. Its 2.0 version went live in January this year, achieving a circulation of over 100 million within two weeks and a TVL exceeding 600 million USD in six months, showing rapid momentum.

Next, we will focus on the latest developments of USDD and analyze the reasons behind its rapid rise.

01 USDD 2.0 Launches Six Months, Emerging as a Dark Horse in Stablecoins

USDD was initially launched by TRON DAO in 2022, positioned as a decentralized stablecoin with an over-collateralized model. Early USDD faced intense competitive pressure and failed to achieve large-scale growth. However, by early 2025, the upgraded 2.0 version of USDD enhanced decentralization, community minting, and smart yield features, quickly becoming the market focus and a "dark horse" in the decentralized stablecoin field.

Recently, community news indicated that USDD will have a series of major moves, likely benefiting from the rapid growth momentum of the upgraded 2.0 version, aiming to capitalize on this to maintain sustainable development and growth.

USDD's social account officially announces native deployment on Ethereum

It is reported that USDD officially launched its native deployment on Ethereum on September 8, 2025, while introducing a reward campaign with up to 12% APY on the Ethereum mainnet. Users holding Ethereum-native USDD can enjoy tiered APY, with a maximum of 12%. Users only need to claim rewards in one go on the Merkl platform after the campaign ends.

With the successful experience of the TRON ecosystem, multi-chain deployment not only expands application scenarios and adoption rates but also broadens the user base while achieving sustainable development. Especially with the Ethereum ecosystem being the largest DeFi hub currently, it provides ample room for growth.

According to official information, in the future of multi-chain collaboration, the vision proposed by the USDD team is to expand the Smart Allocator to other chains, including Ethereum and BNB Chain, making USDD more accessible and bringing higher yields.

Previously, USDD appeared in real-world payment use cases through integrations with payment platforms like AEON Pay and Uquid. The adoption of USDD in the real world can also bring new use case pathways to multi-chain ecosystems like Ethereum and provide more choices for users in these crypto ecosystems.

02 Breaking Free from the Stablecoin Label, What New Features Does Upgraded USDD 2.0 Bring?

Before the multi-chain expansion, many people's impressions of USDD were still stuck on the subsidy-driven USDD 1.0. However, the USDD team's confidence in pushing USDD into multi-chain ecosystems like Ethereum mainly comes from the positive feedback brought by USDD 2.0 over the past six months. So, what new features does the upgraded USDD 2.0 bring?

The old version of USDD can be considered a traditional over-collateralized decentralized stablecoin, while USDD 2.0 has significantly improved security, decentralization, and stability.

Main differences between the new and old versions of USDD

The upgrade of USDD 2.0 has brought some changes as shown in the table above, particularly the introduction of innovative modules such as the Price Stability Module (PSM), Smart Allocator, and secure liquidation and auction mechanisms, which are explained as follows:

• Price Stability Module (PSM): Allows seamless, near-zero fee exchanges between USDD and supported stablecoins (initially USDT) and ensures a 1:1 dollar peg for USDD through an arbitrage mechanism.
• Smart Allocator: Directs idle reserve funds to mature DeFi platforms like Aave and JustLend to earn and distribute returns for USDD stakers. In simple terms, it is a smart "gun pool" for idle funds, shifting from reliance on external subsidies to a self-sustaining model that generates sustainable returns internally. This helps eliminate the unsustainable interest subsidies of the old version and allows the protocol to generate sustainable income.
• Secure Liquidation and Auction Mechanism: If the collateralization ratio falls below a safe line, the system triggers on-chain liquidation to recover collateral assets through an auction, ensuring system stability.

03 Why is USDD Rising?

In fact, compared to centralized stablecoins, decentralized stablecoins, especially over-collateralized stablecoins, have always been the cornerstone of the DeFi ecosystem. They possess irreplaceable importance due to their transparency, resistance to censorship, and on-chain liquidity center, which will undoubtedly play a significant role in future payments, cross-border transactions, and decentralized financial systems.

The rise of USDD is not accidental. Since the launch of USDD 2.0, it has stood out among numerous decentralized stablecoin competitors, based on its multiple advantages in innovation, stability, security, and yield-driven aspects, bringing the possibility of sustainable development:

1. Strong Foundation of the TRON Ecosystem

Data from Defillama shows that among blockchain networks ranked by active addresses, TRON ranks first with 2.5 million active addresses. At the same time, TRON's DeFi TVL is also among the top, and of course, the leading stablecoin USDT has the highest circulation on TRON, with the overall stablecoin issuance leading among major public chains. In summary, the TRON ecosystem has a solid foundation, and its fertile "soil" nurtures impressive project applications.

Ranking of active addresses across major blockchains Source: Defillama

2. Innovation

As mentioned earlier, the Smart Allocator, as one of USDD's core innovations, is an on-chain yield strategy module. Unlike protocols like MakerDAO and Frax that earn money through real-world asset vaults or staking, the Smart Allocator taps into internal reserves and manages them conservatively and transparently, allowing users to receive real rewards based on the protocol without additional operations.

The Price Stability Module (PSM) further solidifies the 1:1 peg to the dollar. Decentralized minting and governance return the "production rights" of stablecoins to users, further enhancing community cohesion.

3. Stability and Security

As a DeFi infrastructure, stability and security are standard features of stablecoins, and the more stable and secure they are, the more liquidity they can attract. In addition to the stabilizing effect of the PSM and the conservative yield strategy of the Smart Allocator mentioned earlier, dynamic collateralization ratios and risk management can also withstand market fluctuations. To avoid excessive exposure to risk, the capital deployment of the Smart Allocator is capped, and all operations are fully transparent and traceable on-chain.

Additionally, relevant contracts and protocols have undergone rigorous audits by the blockchain security company ChainSecurity.

4. Yield-Driven

With the support of the TRON ecosystem, USDD 2.0's APY can reach 20%, mainly derived from TRON DAO's subsidies, over-collateralization model, yield subsidy mechanisms, and TRON's leadership position in the stablecoin market, as well as the operation of the Smart Allocator, ensuring the stability and sustainability of user yield sources.

Moreover, the upcoming sUSDD protocol will help USDD users earn interest through a transparent decentralized savings system, providing services for users seeking passive appreciation of stablecoin assets.

04 Next Steps Roadmap

According to the roadmap presented by USDD, the next steps will likely involve further deployment to more mainstream blockchains, such as BNB Chain, to bring more adoption and user growth possibilities. Entering more blockchain ecosystems will inevitably introduce more stablecoins and other crypto assets, further leveraging the stabilizing effect of the Price Stability Module (PSM) and supporting more collateral types, injecting new vitality into these ecosystems.

The changes in the minting mechanism and governance model of the new and old USDD indicate that USDD is strengthening decentralized governance, empowering the community to gain greater say and governance rights in decision-making and resource management, driving USDD towards a more autonomous and sustainable protocol.

By expanding through multi-chain deployment, USDD opens up to more crypto users, broadening the scope of adoption, and essentially possesses the potential to become a foundational infrastructure for the entire crypto ecosystem's DeFi, unlocking greater growth space.

05 Conclusion

Those who plant trees benefit later. In the past few years, stablecoin projects like LUNA that have experienced significant ups and downs have left valuable experiences and lessons for successors. USDD is continuously learning from these experiences through constant upgrades and iterations, exploring new directions for decentralized stablecoins.

It has gradually evolved from an initial single-chain protocol to a multi-chain DeFi infrastructure that balances innovation, optimization, and community autonomy.

Thus, it can be seen that USDD's goal is to create a transparent, decentralized, and sustainable long-term value protocol. If these strategies can be successfully implemented, USDD is expected to become a representative project of decentralized stablecoins in the future.

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