Justin Sun Launches USDD on Ethereum, Challenging the 2.5 Trillion USD Stablecoin Market

On September 8, 2025, Justin Sun officially launched the USDD stablecoin on the Ethereum network, marking an important step in the project's multi-chain expansion plan. This is the first time USDD – the algorithmic stablecoin (overcollateralized) originally from the TRON blockchain – is available on Ethereum, featuring many new functions to support liquidity and generate profits on-chain. USDD on Ethereum: Peg Stability Module and High Yield The Ethereum version of USDD comes with the Peg Stability Module (PSM), allowing for direct 1:1 swaps with USDT and USDC. This is an important mechanism to improve liquidity and price stability, as USDD aims to maintain a peg of 1 USD. To promote adoption, the project is launching an airdrop campaign starting from September 9, offering on-chain yields of up to 12% for Ethereum users, gradually decreasing to 6% as utilization increases. Users can collect rewards continuously every eight hours through the Merkl Dashboard. Justin Sun shares on X: “From now on, everyone has the option of a decentralized stablecoin! USDD is developing! Swap USDD and participate in mining with an APY of up to 12%!” In the near future, USDD is expected to launch sUSDD, a direct on-chain interest-bearing version, aimed at providing passive income for holders. Guarantee Mechanism and Volatility History Currently, USDD maintains a collateral ratio of 204.5%, primarily based on TRX, after Justin Sun withdrew 726 million USD in Bitcoin in August. Although this design aims to avoid peg loss risks, USDD has faced significant pressure in the past: dropping to 0.983 USD during the Terra crash in 2022 and 0.97 USD during the FTX crisis in the same year. Tether Still Dominates, But Competition is Increasing Tether (USDT) continues to dominate the stablecoin market with superior market capitalization and liquidity. Specifically, TRON handles about 23–25 billion USD in USDT transactions daily, while Ethereum handles around 20 billion USD. USDT on TRON currently circulates about 80 billion USD, while Binance holds approximately 44 billion USD in stablecoins, accounting for two-thirds of the reserves of exchanges. However, the market is expanding with many new competitors. MetaMask is preparing to integrate mUSD, Paxos is proposing USDH with a revenue-sharing mechanism, while EURC and PYUSD are seeing strong year-over-year growth. The new regulatory frameworks in the EU (MiCA) and the US (GENIUS Act) are also facilitating the development of compliant stablecoins. In Asia, Singapore, Hong Kong, and Japan are also pushing for clearer regulations on the issuance and supervision of stablecoins, aiming to attract institutional capital. Big Challenge for USDD Although USDD has an attractive mechanism and incentives, with a market capitalization of only around 450–460 million USD in mid-September 2025 – which is only 0.3% compared to Tether – its scale is still very limited. Liquidity on Ethereum has improved thanks to PSM, but market depth is still lacking compared to USDT and USDC, and reserves remain significantly affected by TRX price fluctuations. To exist long-term, USDD needs: Increase liquidity across multiple blockchains. Diversify collateral assets. Integrate into practical use cases in the on-chain economy. Conclusion The launch of USDD on Ethereum marks an important step in Justin Sun's multi-chain strategy, providing users with more options for decentralized stablecoins. However, with the strong dominance of Tether and emerging new competitors, USDD needs significant efforts to strengthen liquidity, expand usability, and maintain long-term stability.