Justin Sun’s USDD Stablecoin Expands to ETH With 12% Yield Product
USDD Goes Multi-Chain
Investor Takeaway
Collateral and Stability Concerns
USDD attempts to maintain its peg through smart contracts, over-collateralization, and swaps with . The ETH version includes a Peg Stability Module designed to reduce slippage during minting and redemption. The project also underwent a security audit by CertiK. However, security checks cannot guarantee long-term solvency.
Critics argue that USDD remains undercollateralized. Last year, the Tron DAO Reserve withdrew $750 million in BTC reserves, leaving the stablecoin heavily reliant on Tron’s TRX token. Bluechip, a stablecoin ratings group, gives USDD an “F” grade, estimating collateral at just 53%—far below the 100% threshold maintained by USDC and DAI. Even Tether, often criticized for opacity, reports over $120 billion in reserves with attestations.
USDD’s circulating supply has shrunk to $460 million, down from $750 million a year ago, contrasting with a stablecoin market that has grown beyond $160 billion in 2025, led by USDT and USDC.
Why ETH Matters
ETH remains the dominant hub for DeFi and stablecoins, while Tron has built its strength in USDT settlement flows, processing more than $12 billion daily, according to Messari. By joining ETH, USDD viewks to access deeper liquidity pools and a broader developer base. “ETH is home to the largest , protocols, and liquidity in DeFi,” the USDD team wrote in a blog post.
The deployment could make USDD more relevant to institutions and builders, but it also places it under closer scrutiny from ETH’s more mature DeFi ecosystem—where transparency and collateralization are increasingly demanded by users and regulators.
Investor Takeaway
Echoes of TerraUSD
The ETH launch comes . The 2022 collapse of TerraUSD erased over $40 billion in investor wealth and triggered global regulatory crackdowns. Since then, watchdogs from the U.S. to Europe have labeled algorithmic models “inherently fragile.”
Despite the warning signs, USDD’s backers argue that its design, over-collateralization, and new Peg Stability Module diverseiate it from Terra. Still, with ratings agencies flagging collateral shortfalls and its supply declining even in a growing market, USDD faces a steep uphill battle to gain long-term credibility.
The rollout highlights the continuing tension between DeFi innovation and systemic risk. While ETH exposure could unlock adoption, USDD’s success will depend on whether it can prove sustainable in the face of regulatory pressure, collateral skepticism, and investor memories of past failures.
