Ethereum News Today: Ethereum's Stablecoin War: USDD Challenges Tether's Empire with Yield and Strategy

Justin Sun’s USDD stablecoin has launched on the Ethereum blockchain, marking a significant step in its strategy to expand beyond its native TRON network and directly compete with Tether’s $169 billion market capitalization. The launch follows a record $165 billion in stablecoin supply on Ethereum, offering USDD a window to enter the largest decentralized finance ecosystem. The new deployment includes a 12% annual percentage yield (APY) airdrop for Ethereum holders, aiming to incentivize adoption. However, the token must contend with Tether’s dominance, which maintains a 367 times larger market capitalization.

USDD’s algorithmic model relies on overcollateralization, currently backed at a 204.5% ratio. This backing is primarily supported by TRX tokens, following the removal of $726 million in Bitcoin collateral in August 2024. The CertiK audit of the Ethereum deployment has added a Peg Stability Module, enabling 1:1 swaps with USDT and USDC to address liquidity concerns. This mechanism builds on past lessons from the Terra algorithmic collapse, with USDD managing to maintain its peg during previous depegging events, including the Terra implosion in May 2022 and the FTX collapse in November 2022.

The stablecoin’s Ethereum deployment features a tiered rewards system, with yields ranging from 12% for low total value locked (TVL) to 6% as adoption increases. These distributions occur every eight hours through the Merkl Dashboard, based on daily snapshots of user holdings. The contract address is now live, with immediate USDT and USDC swap functionality. Future plans include launching sUSDD, an interest-bearing version designed for passive yield generation. USDD’s presence on Ethereum is part of a broader multi-chain strategy, with deployments across 10 blockchain networks, including BSC, Avalanche, and Polygon, supported by cross-chain bridges from Stargate Finance, Symbiosis, and DeBridge.

Tether’s dominance, however, remains formidable. Its daily trading volume is 23,500 times larger than USDD’s and is supported by near-universal exchange availability. In July 2025, TRON surpassed Ethereum in USDT liquidity with $80.8 billion in transactions, highlighting Tether’s entrenched position in the stablecoin sector. Tether claims 75.86% of its reserves are U.S. Treasury bills, contrasting with USDD’s volatile TRX-heavy collateral structure. Meanwhile, Binance holds 67% of all exchange stablecoin reserves, amounting to $44.2 billion, with the majority in USDT and USDC.

The stablecoin sector is witnessing increasing fragmentation, with Chainalysis reporting $2.5 trillion in transaction volume industry-wide. Emerging competitors include MetaMask’s planned mUSD for wallet integration and Paxos’s USDH, which offers 95% revenue sharing to token holders. Smaller stablecoins like EURC and PYUSD have demonstrated rapid growth, expanding from $47 million to $7.5 billion and $783 million to $3.95 billion in euro-denominated transactions over the past year, respectively. Regulatory clarity from the EU’s Markets in Crypto-Assets (MiCA) and the U.S. GENIUS Act is creating opportunities for compliant alternatives to capture market share from established players. Industry forecasts suggest the stablecoin market could reach $1 trillion in annual payment volume by 2028, with Citigroup predicting a potential $2 trillion market cap by 2030.

Source: [1] Crypto Billionaire Justin Sun's USDD Stablecoin Launches on Ethereum – Can It Overtake Tether? (https://cryptonews.com/news/crypto-billionaire-justin-suns-usdd-stablecoin-launches-on-ethereum-can-it-overtake-tether/) [2] RWA.xyz | Analytics on Tokenized Real-World Assets (https://app.rwa.xyz/) [3] Want Low-Cost Transfer of Tron USDT? Don't Miss This ... (https://support.token.im/hc/en-us/articles/27669064968729-Want-Low-Cost-Transfer-of-Tron-USDT-Don-t-Miss-This-Energy-Guide)