USDD, the Justin Sun-backed stablecoin, launches natively on Ethereum

USDD, the decentralized stablecoin backed by Tron founder Justin Sun, has launched on Ethereum, according to an announcement on Monday.

"This marks a key milestone in USDD’s journey toward becoming a truly multi-chain, accessible, and versatile stablecoin," the USDD team wrote in a Medium post. "A new era begins as USDD expands beyond TRON, bringing stability and scalability to the largest smart contract ecosystem."

As part of the redeployment, the Decentralized USD team promises an "exclusive airdrop" for early adopters starting on Tuesday. It also plans to launch sUSDD, a savings version of USDD, to enable users to earn interest on their holdings "through a decentralized and transparent savings system."

"The decentralized stablecoin USDD has finally arrived on Ethereum!" Sun wrote on X, noting the stablecoin could achieve up to 12% APY. "From now on, everyone has a decentralized choice when it comes to stablecoins! USDD is growing!"

USDD is a decentralized stablecoin that uses a combination of smart contracts, over-collateralization, and market mechanisms to sustain its peg to the U.S. dollar. The stablecoin was initially launched by the TRON DAO Reserve in May 2022, close to the collapse of the algorithmic stablecoin UST.

USDD was initially launched as an alternative algorithmic stablecoin but has since been revamped. In January, the team launched USDD 2.0, which is fully backed by crypto reserves. To mint USDD, users must provide collateral assets like TRX or USDT. 

The stablecoin on Ethereum will now support a "Peg Stability Module" to enable users to mint and swap USDD against USDT and USDC with limited-to-no slippage. "This ensures efficient liquidity and price stability from day one," the team explained.

According to the announcement, the launch on Ethereum follows a "full audit" conducted by crypto security firm CertiK.

In August 2024, the Tron DAO Reserve removed nearly $750 million worth of bitcoin backing the USDD stablecoin, making the asset primarily backed by Tron’s native token TRX. At launch, the DAO said it would "raise $10 billion in reserves from prominent blockchain industry players" to protect the stablecoin from downturns.

Bluechip, a supposedly independent stablecoin rating agency, previously flagged concerns with USDD’s alleged decentralization. The organization, which gave the stablecoin an "F" on its grade of stablecoin stability, estimated USDD's true collater­alization to be around 53%, though the organization is working on a new model to gauge USDD 2.0. 

There is approximately $460 million worth of USDD in circulation, down from around $750 million around this time last year, according to CoinGecko. That said, a spokesperson told The Block that "during the protocol upgrade to USDD 2.0, the market cap was regrown from zero — making year-over-year comparisons irrelevant."

The vast majority of stablecoins are issued on the Ethereum mainnet and surrounding Layer 2 ecosystem, though Tron is a popular stablecoin hub, particularly for Tether users, according to The Block's data.

"Ethereum is home to the largest community of developers, protocols, and liquidity in DeFi," the USDD team wrote. "By deploying natively on Ethereum, USDD expands its utility and adoption across a broader ecosystem while maintaining its commitment to transparency, decentralization, and sustainable yield."

Editor's note (Sept. 19 21:00 UTC): USDD is no longer algorithmically supported since an upgrade in January, according to a spokesperson.