Every time there is a new fluctuation in the stablecoin market, I reassess my asset allocation, especially when structural changes begin to appear on the yield side. The most obvious trend this year is that 'stablecoins are no longer just stable', but have been drawn into an increasingly aggressive, transparent, and competitive yield narrative. In this wave, Decentralized USD (USDD) is a project that I have recently studied seriously and indeed adjusted my holding strategy.
The reason for bringing USDD back to the forefront is not because it launched the so-called '2.0 upgrade' event, but rather due to the fundamental changes in the stablecoin industry over the past few months: regulation continues to advance, RWA expansion, on-chain capital return, and a significant increase in yield demand, while the interest rates of purely centralized stablecoins cannot keep pace. In other words, the market has given 'yield-bearing over-collateralized stablecoins' a real stage.
Let me first talk about my most intuitive experience. The price stability of USDD has performed better than expected over the past few months—fluctuating slightly around 1 dollar almost all the time, while the collateral rate has maintained a range of 107%–120% for years, with reserve assets covering multiple types such as TRX, sTRX, and mainstream stablecoins. This structural decision is essentially very pragmatic: it no longer attempts to rely on algorithms to maintain the peg but directly relies on verifiable asset collateral. For on-chain users, this logic of 'transparent reality being more important than innovation' is actually safer.
But what is more worth discussing about USDD is its actions on the yield side. With the comprehensive shift to a verifiable collateral mechanism in USDD 2.0, it simultaneously launched sUSDD, a yield product, making the entire ecosystem's yield structure very attractive: sUSDD offers a fixed yield range of around 10%–12%, and when paired with Uniswap for LP, the annualized yield of the sUSDD–USDT pool once exceeded 40%. The key point of this design is not 'high yield', but 'yield stratification', which meets the needs of users with different risk preferences.
For example, I personally lock part of my positions in sUSDD to earn relatively stable base returns, while another part is used for LP to obtain additional trading fees and incentives. The experience of this strategy combination is much better than traditional stablecoins, because you do not have to bear the price risk of inflationary tokens; the returns come from the volatility and trading volume of the stablecoin pair.
Interestingly, USDD is no longer satisfied with just circulating within the Tron ecosystem this year, but is expanding significantly to mainstream chains like Ethereum and BNB Chain, and it is a 'native deployment' rather than bridged assets. For someone like me, whose main battlefield is on ETH, the significance of this change is very direct—previously, using USDD required cross-chain operations, but now I can directly use it on Uniswap. This action of 'reducing usage friction' can improve actual adoption rates more than any marketing slogan.
However, if we only discuss 'returns' and 'multi-chain deployment', it is still not enough to constitute my long-term interest in USDD. What I am truly concerned about is whether it can capture the next core change in the stablecoin industry: the diversification of settlement assets.
In the past, the stablecoin market was typically a 'winner takes all', with USDT and USDC firmly occupying the vast majority of scenarios. However, after 2025, with the continuous growth of on-chain RWA, institutional funds, and cross-chain liquidity routing demands, the market will begin to need assets that are more flexible than centralized stablecoins and more robust than algorithmic stablecoins. These assets must be decentralized while ensuring stability; they must be able to participate in yields without sacrificing the risk bottom line.
USDD is precisely in this 'middle ground'. It is neither the heavily regulated model like USDC nor an extreme algorithmic stablecoin, but a product that balances decentralization, transparent collateral, and yield capability. Moreover, based on on-chain data from the past few months, USDD's liquidity depth in Ethereum DEX has grown rapidly, making it easier than before to obtain real trading fees as an LP asset.
Of course, if we only talk about the advantages, it would resemble self-promotion by the project party. Even as an active user of this asset, I must admit that USDD has several risk points that need to be observed in the long term:
First, the concentration of the collateral structure is still relatively high. Although the overall collateral rate is sufficient, the proportion of TRX and sTRX is still quite large, which means that USDD will bear greater pressure during extreme market conditions within the Tron ecosystem.
Second, the incentive component within the yield structure remains relatively high. The ratio of protocol revenue to incentive subsidies is constantly changing, with attractive APY in the short term, but long-term monitoring of whether 'real cash flow' can support stable yields is needed.
Third, the adoption of cross-chain is still on the rise. Although native deployment has improved usability, to truly become a stablecoin option in the Ethereum ecosystem, more DeFi protocols need to be integrated.
But the problem is, in the stablecoin competition in 2025, no product is perfect. USDT has regulatory uncertainties, USDC has limitations in scenario coverage, and DAI has governance complexities. In contrast, products like USDD have formed an 'incremental opportunity zone'—it meets a portion of users' real demand for 'yield-bearing decentralized stablecoins'. As long as its collateral model can continue to function, it qualifies to be included in more people's stablecoin portfolios.
My current strategy is as follows: Most of my stablecoin positions are kept in USDT/USDC, but I allocate a fixed proportion for the yield combination of USDD and sUSDD. One part locks in returns, while another part does LP, seeking additional returns under controllable risk. After a few months of practice, I found that this combination significantly improves overall returns while keeping risks within an acceptable range.
Ultimately, the essence of the stablecoin market has never been about 'who is the most stable', but rather 'whose structure is most adaptable in the future'. The current path of USDD is clear: transparent collateral, multi-chain expansion, yield enhancement, and scenario overflow. If it can continue to maintain this pace, it will not be difficult to find its place in the future segmented stablecoin market.
For me, it has already upgraded from the 'watchlist' to 'a part of my strategy allocation'. As for whether it can eventually scale up, let time on-chain prove it.
