USDD Stablecoin Launches on Ethereum with Bold 12 Percent Rewards

Key Points

• USDD goes live on Ethereum with Peg Stability Module
• Users get up to 12% APY rewards via early incentive program
• Tether still dominates with $169B, leaving USDD far behind
• USDD must build liquidity, trust, and diverse collateral

USDD Stablecoin has officially launched on Ethereum, signaling a new phase in Justin Sun’s push to compete in the multi-trillion-dollar stablecoin market.

The rollout comes as Ethereum’s stablecoin supply climbs to $165 billion, highlighting the network’s role as a hub for dollar-pegged assets.

USDD Stablecoin launch brings incentives and stability features

The USDD Stablecoin is an overcollateralized algorithmic stablecoin, first created on the TRON blockchain. It aims to hold its $1 peg while offering high on-chain yields. On September 8, its Ethereum contract went live after passing a CertiK security audit, ensuring a higher level of confidence for early adopters.

At the center of this expansion is the Peg Stability Module (PSM). This tool allows users to swap USDT or USDC for USDD Stablecoin at a 1:1 ratio, giving the new stablecoin instant access to Ethereum’s deep liquidity pools.

By mirroring the mechanics of MakerDAO’s DAI, the PSM helps stabilize price and supports smoother trading activity.

To drive adoption, USDD launched a tiered incentive campaign on September 9. Rewards begin at 12% APY and gradually reduce to 6% as more users participate. Yield accrues continuously and can be claimed every eight hours through the Merkl Dashboard.

Justin Sun promoted the launch on X, declaring:

“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!”

The decentralized stablecoin USDD has finally arrived on Ethereum! 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! https://t.co/BnOdt3ZfHL

— H.E. Justin Sun 👨‍🚀 (Astronaut Version) (@justinsuntron) September 8, 2025

This move comes months after Justin Sun faced scrutiny over wallet freezes, further highlighting how his projects continue to draw both innovation and controversy.

Planned upgrades include sUSDD, an interest-bearing version of the USDD Stablecoin that automatically generates passive income on-chain. This would give holders a way to earn without staking or complex setups, positioning USDD as a competitive product against both decentralized and centralized stablecoins.

Currently, the USDD Stablecoin maintains a collateral ratio of 204.5%, backed mostly by TRX. Sun’s withdrawal of $726 million in Bitcoin collateral in August shifted the balance heavily toward TRX, raising concerns about diversification.

Despite safeguards, USDD has shown vulnerability in the past, dropping below its peg during the Terra collapse in 2022 and again during the FTX crisis later that year.

🚀 Big news: #USDD is now natively LIVE on Ethereum— with an Exclusive Airdrop launching soon! 🎁

A new era begins as #USDD expands beyond TRON, bringing stability & scalability to the largest smart contract ecosystem.

Here’s what’s coming your way:
💱 Zero-slippage swaps with… pic.twitter.com/6gAJyIHmiM

— USDD 2.0 (Ethereum Native Live 💎 Airdrop Coming) (@usddio) September 8, 2025

Tether’s dominance overshadows USDD Stablecoin ambitions

The rise of the USDD Stablecoin comes in a market still dominated by Tether, which boasts $169 billion in circulating supply. On TRON alone, USDT processes about $23–25 billion in daily transfers, while Ethereum handles around $20 billion.

With Binance holding two-thirds of all stablecoin reserves, the liquidity moat around USDT remains nearly impossible to breach.

Still, competitors are lining up. MetaMask is preparing to launch mUSD, Paxos has introduced its USDH proposal with revenue-sharing mechanics, and stablecoins like EURC and PYUSD have shown strong growth over the past year.

We’ve also seen Kazakhstan’s crypto reserve plan push for a 2026 launch, showing how even nation-states are exploring ways to create digital reserves and compete in the stablecoin economy.

On the regulatory side, Europe’s MiCA framework and the US GENIUS Act are shaping compliance-focused models, while Asia is also progressing with stablecoin regulations in Singapore, Hong Kong, and Japan.

These moves create opportunities for alternatives like the USDD Stablecoin to position themselves as regulatory-friendly assets.

Yet, scale remains the challenge. With a market cap of just $450–460 million in September 2025, the USDD Stablecoin represents only about 0.3% of Tether’s size.

Its liquidity on Ethereum has improved through the Peg Stability Module, but trading depth still trails far behind USDT and USDC. On top of that, heavy dependence on TRX as collateral leaves the project exposed to sharp market downturns.

For USDD to compete meaningfully, it must secure more diversified reserves, stronger partnerships, and real-world integrations. Without these, the USDD Stablecoin risks becoming a short-term yield opportunity rather than a trusted settlement layer.

Can USDD Stablecoin carve its place in the stablecoin market

The launch of the USDD Stablecoin on Ethereum is more than just a technical move, it’s a strategic attempt to break into a crowded field.

By offering attractive APYs and leveraging the Peg Stability Module, Justin Sun is betting that users will be drawn to a decentralized alternative to Tether and USDC.

However, history shows that incentives alone rarely build lasting dominance. For USDD Stablecoin to thrive, it must prove its resilience in market shocks, gain listings across major exchanges, and integrate into decentralized applications that power lending, payments, and remittances.

This path mirrors how projects like MYX Finance’s sudden surge or Ripple’s NFT expansion grabbed short-term attention but still needed long-term fundamentals to sustain growth.

At the same time, infrastructure developments such as Tempo Blockchain’s push for new scaling solutions highlight how the broader ecosystem is maturing, giving emerging stablecoins like USDD more opportunities for integrations and adoption.

With regulators worldwide shaping the future of digital dollars, the USDD Stablecoin has both opportunities and challenges ahead.

Its ability to scale beyond early yield-seeking adopters will determine whether it becomes a genuine player in the global stablecoin economy or remains in the shadows of giants like Tether and USDC.