Ethereum News Today: USDD Challenges Tether’s Dominance with 12% APY Airdrop on Ethereum

Justin Sun’s USDD stablecoin has officially launched on the Ethereum blockchain, marking a significant expansion for the stablecoin beyond its native TRON network. The Ethereum deployment coincides with record $165 billion in stablecoin supply on the network, presenting an opportunity for USDD to enter the largest decentralized finance (DeFi) ecosystem. Tether, currently the leading stablecoin with a $169 billion market cap, remains the dominant player, but USDD aims to gain traction with a 12% annual percentage yield (APY) airdrop for Ethereum users [3].

The launch introduces a Peg Stability Module, following a comprehensive CertiK audit, which enables 1:1 swaps with Tether’s USDT and Circle’s USDC. This functionality is intended to address liquidity concerns and ensure price stability amid market fluctuations. USDD’s algorithmic model, which relies on overcollateralization, has maintained a 204.5% backing ratio, primarily supported by TRX tokens after the removal of $726 million in Bitcoin collateral in August 2024. This shift reflects a strategic move by Justin Sun to diversify USDD’s collateral base [3].

The APY rewards are structured to vary with the total value locked, offering up to 12% at low adoption levels and decreasing to 6% as usage grows. Rewards will be distributed every eight hours through the Merkl Dashboard, based on daily snapshots of user balances. Additionally, future plans include the launch of sUSDD, an interest-bearing version of the stablecoin, to facilitate passive yield generation. This feature could attract institutional and retail investors seeking stable returns in a volatile market [3].

USDD’s Ethereum deployment also expands its cross-chain presence, as it is now operational on 10 blockchain networks, including BSC, Avalanche, and Polygon. Cross-chain bridges from Stargate Finance, Symbiosis, and DeBridge support this multi-chain strategy, enhancing USDD’s accessibility and liquidity across various ecosystems. This move aligns with broader growth in the TRON ecosystem, where SunSwap maintains $3 billion in monthly trading volume and JustLend reports a 23% increase in borrowing transactions since 2024 [3].

Despite these developments, USDD faces significant challenges from Tether, which dominates the stablecoin market with a daily trading volume 23,500 times higher than USDD’s. Tether also enjoys widespread support across centralized and decentralized exchanges, with its USDT variant processing over $24.6 billion daily on TRON alone. In July 2025, TRON surpassed Ethereum in USDT liquidity, processing $80.8 billion in transactions compared to Ethereum’s $73.8 billion. Tether’s reserve backing, which includes 75.86% in U.S. Treasury bills and 12.09% in overnight repos, contrasts with USDD’s structure, which relies on volatile TRX assets [3].

Industry projections suggest the stablecoin sector will continue to grow, potentially reaching $1 trillion in annual payment volume by 2028, with some forecasts predicting a $2 trillion market cap by 2030. Regulatory clarity under the EU’s MiCA and the U.S. GENIUS Act could benefit compliant alternatives like USDC and USDT, which cater to institutional and emerging market demand. Meanwhile, smaller stablecoins like EURC and PYUSD have demonstrated rapid growth, capturing specialized niches and leveraging new technological innovations [3].

Source:

[1] Better Stablecoin Buy: Tether vs. USDC (https://www.mitrade.com/insights/news/live-news/article-8-1098953-20250905)

[2] Better Stablecoin Buy: Tether vs. USDC - Yahoo Finance (https://finance.yahoo.com/news/better-stablecoin-buy-tether-vs-091300738.html)

[3] Crypto Billionaire Justin Sun’s USDD Stablecoin Launches on Ethereum – Can it Overtake Tether? (https://cryptorank.io/news/feed/5ab9c-crypto-billionaire-justin-suns-usdd-stablecoin-launches-on-ethereum-can-it-overtake-tether)

[4] Crypto Billionaire Justin Sun's USDD Stablecoin Launches on ... (https://finance.yahoo.com/news/crypto-billionaire-justin-sun-usdd-214614186.html)