Justin Sun’s USDD stablecoin has officially launched on Ethereum as the network’s stablecoin supply climbs past $165 billion.
The rollout introduces a Peg Stability Module (PSM) for direct swaps with USDT and USDC while offering up to 12% APY for early adopters.
The move adds a new competitor in the $2.5 trillion stablecoin market, long dominated by Tether.
Ethereum launch and incentives
USDD, originally launched on the TRON blockchain, now operates natively on Ethereum. It is an overcollateralized algorithmic stablecoin designed to maintain a dollar peg while providing on-chain yields. Its Ethereum contract went live on September 8 after a CertiK audit confirmed readiness.
The Peg Stability Module ensures efficient liquidity by enabling seamless 1:1 swaps with USDT and USDC. To drive adoption, an airdrop campaign started on September 9.
It offers tiered yields starting at 12% and gradually tapering to 6% as circulation grows. Rewards are distributed continuously and claimable every eight hours through the Merkl Dashboard.
Justin Sun promoted the launch on X, writing, “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!”
Planned upgrades include sUSDD, an interest-bearing version that will generate passive yield directly on-chain. Sun positions the rollout as the first step in a larger multi-chain expansion strategy.
Market position and risks
At launch, USDD reported a collateral ratio of 204.5%. TRX primarily backs this reserve after Sun withdrew $726 million in Bitcoin collateral in August.
The structure is designed to reduce destabilization risk. However, USDD has experienced stress before. It fell to $0.983 during Terra’s 2022 collapse and to $0.97 during the FTX meltdown.
Despite improved liquidity through the PSM, USDD remains small compared to Tether. Its market cap stands around $450–$460 million, just 0.3% of Tether’s scale.
TRON processes roughly $23–25 billion in daily USDT transfers, more than Ethereum’s $20 billion. TRON’s USDT supply exceeds $80 billion, while Binance holds about $44 billion in stablecoins, accounting for two-thirds of its reserves.
The competitive landscape is expanding beyond Tether and Circle. MetaMask is preparing to launch mUSD, while Paxos has proposed USDH with revenue-sharing features. Other stablecoins such as EURC and PYUSD are gaining market share.
Regulatory clarity is also advancing. Europe’s MiCA framework, the US GENIUS Act, and policies in Singapore, Hong Kong, and Japan are creating conditions for institutional adoption.