Written by: Bob, Plainspoken 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 such as A16z and Messari have explicitly 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 program, which has garnered 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 was launched in January this year, achieving a circulation of over 100 million within 2 weeks and a TVL exceeding 600 million USD in half a year, showing strong momentum.
Next, we will focus on the latest developments of USDD and analyze the reasons behind its rapid rise.
01 USDD 2.0 has been online for half a year, emerging as a dark horse in the stablecoin market.
USDD was initially launched by TRON DAO in 2022, positioned as a decentralized stablecoin with an over-collateralization model. The early USDD failed to achieve substantial growth due to intense competitive pressure. However, by early 2025, the iteration to version 2.0 upgraded USDD with decentralized, community minting, and smart yield functionalities, quickly becoming the market focus and a “dark horse” in the decentralized stablecoin sector.
Recently, community news suggests that USDD is set to take a series of significant actions, likely benefiting from the momentum of the 2.0 upgrade, as USDD plans to capitalize on its rapid growth to maintain sustainable development and expansion.
USDD social media account officially announced that it will be natively deployed on Ethereum.
It is reported that USDD was officially natively deployed on Ethereum on September 8, 2025, while launching a reward program with up to 12% APY on the Ethereum mainnet, where users holding native USDD on Ethereum can enjoy tiered APY, with a maximum of 12%. Users only need to claim their rewards in one go on the Merkl platform after the event ends.
With the successful experience of the TRON ecosystem, multi-chain deployment can not only expand application scenarios and adoption rates, but also achieve sustainable development while expanding the user base. In particular, the Ethereum ecosystem, as the largest DeFi base currently, provides ample room for development.
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, which will make USDD more accessible and bring higher returns.
Previously, USDD has appeared in real-world payment use cases through integrations with payment services like AEON Pay and Uquid. The adoption of USDD in the real world can also bring new use case pathways to multi-chain ecosystems such as Ethereum and provide more options for users within these crypto ecosystems.
02 Breaking free from the stable label, what new things does the upgraded USDD 2.0 bring?
Before the multi-chain expansion, many people's impression of USDD was still stuck on the USDD 1.0 that relied on subsidy returns. However, the reason why the USDD team is so confident in promoting USDD to multi-chain ecosystems like Ethereum is mainly due to the positive feedback brought by USDD 2.0 over the past six months. So what new things has the upgraded USDD 2.0 brought?
The old version of USDD can be described as a traditionally over-collateralized decentralized stablecoin, while USDD 2.0 mainly brings significant improvements in security, decentralization, and stability.
Main Differences Between the Old and New Versions of USDD
The upgrade of USDD 2.0 mainly brings some changes as shown in the table above, particularly the introduction of innovative price stability module (PSM), smart allocator (Smart Allocator), and security liquidation and auction mechanism modules, which are specifically described as follows:
Price Stability Module (PSM): Allows for 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 (: By directing idle reserve funds to established DeFi platforms like Aave and JustLend, it earns and distributes returns for USDD stakers. In simple terms, it is an intelligent “machine gun pool” for idle funds, shifting from dependence on external subsidies to a self-sustaining model that generates sustainable returns from within the protocol. This helps to eliminate unsustainable interest subsidies from the old version, allowing the protocol to generate sustainable earnings internally.
Safe liquidation and auction mechanism: Once the collateralization ratio falls below the safety line, the system will trigger on-chain liquidation and recover collateral assets through auction to ensure 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 with characteristics such as transparency, censorship resistance, and on-chain liquidity centers, and are bound to 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 a range of decentralized stablecoin competitors, bringing the possibility of sustainable development based on its multiple advantages in innovation, stability, security, and yield-driven aspects.
- The foundation of the TRON ecosystem is strong.
According to data from Defillama, various blockchain networks are ranked by the number of active addresses, with TRON leading with 2.5 million active addresses. At the same time, TRON's DeFi TVL is also among the top, and of course, the circulation of the stablecoin king USDT is also at the forefront on TRON, with the overall stablecoin issuance leading among major public chains. Overall, the TRON ecosystem has a solid foundation, and the fertile “soil” has nurtured impressive project applications.
Ranking of Active Addresses on Major Blockchains Source: Defillama
- Innovation
As mentioned earlier, the Smart Allocator )Smart Allocator(, as one of the core innovations of USDD, is also an on-chain yield strategy module. Unlike protocols such as MakerDAO and Frax that earn money through real-world asset vaults or staking, the Smart Allocator digs into internal reserves and manages them conservatively and transparently, allowing users to earn real rewards based on the protocol without any additional operations.
The price stability module )PSM( further consolidates the 1:1 peg to stable dollars. Decentralized minting and governance return the “production rights” of stablecoins to users, further enhancing the cohesion of the community.
- Stability and Security
As a DeFi infrastructure, the linkage to stability and security is a standard feature of stablecoins, and the more stable and secure they are, the more liquidity they can naturally attract. In addition to the stabilizing effects of PSM and the conservative yield strategy of the Smart Allocator mentioned earlier, dynamic collateral ratios and risk management can also withstand market fluctuations. To avoid excessive exposure to risk, the capital deployment of the Smart Allocator is set with an upper limit, and the execution of operations is completely transparent and traceable on-chain.
In addition, the relevant contracts and agreements have been rigorously audited by the blockchain security company ChainSecurity.
- Revenue Driven
With the support of the TRON ecosystem, the APY of USDD 2.0 can reach 20%, primarily coming from the subsidies of the TRON DAO, the over-collateralization model, the yield subsidy mechanism, the support of TRON's leadership position in the stablecoin market, and the operation of the smart allocator, ensuring the stability and sustainability of users' income sources.
In addition, 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 step for USDD is likely to continue deploying 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 stability provided by the price stability module )PSM(, supporting more collateral, and so on. This will inject new vitality into these ecosystems.
The changes in the old and new USDD minting mechanisms and governance models indicate that USDD is strengthening decentralized governance, promoting the community to gain a greater voice and governance power in decision-making and resource management, driving USDD towards a more autonomous and sustainable protocol.
USDD expands its reach to more crypto users through multi-chain deployment, broadening the scope of adoption and effectively possessing the potential to become the foundational infrastructure for the entire crypto ecosystem DeFi, opening up greater growth space.
05 Summary
“Those who plant trees enjoy the shade later.” In the past few years, stablecoin projects like LUNA, which have experienced significant ups and downs, have left valuable experiences and lessons for those that follow. USDD has drawn from these experiences through continuous upgrades and iterations, exploring new directions for decentralized stablecoins.
It has gradually evolved from an initial single-chain protocol into a multi-chain DeFi infrastructure that balances innovation, optimization, and community autonomy.
This shows that the goal of USDD 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.
