USDD has shed roughly $300 million in market capitalization in about a month, falling from $1.81 billion on October 12 to near $1.51 billion, according to DefiLlama. The decline comes after TRON founder Justin Sun predicted on X that USDD would remain the fastest-growing stablecoin next year, responding to a post that credited it with 165% market cap growth over twelve months based on Grok chatbot figures.
Sun's forecast includes no supply target or timetable, and the comparison behind the 165% figure is narrow. It measures USDD against only USDG, RLUSD, USDT and USDC, excluding fast-growing issuers such as PayPal's PYUSD and World Liberty Financial's USD1, and sets no minimum size threshold. Data provider DIA reports about 1.3 billion USDD in circulation versus DefiLlama's 1.51 billion, after it stopped counting a legacy Ethereum contract on October 2; on that smaller base, DIA shows twelve-month growth near 250% and a 30-day decline of about 17%.
The contraction is not isolated to USDD. Over 60 days, Tether's USDT market capitalization lost about $6.6 billion, more than twice the dollar decline seen after FTX collapsed in December 2022. The total stablecoin market fell 4.57% to $289.81 billion over 30 days, while CoinDesk and Glassnode data describe a retreat from a May 2026 peak near $270 billion toward roughly $244 billion, including a one-month drop of about $17 billion. This shrinking cash-like liquidity is a key concern for traders moving funds between exchanges, DeFi protocols and new positions.
USDD's supply mechanics help explain the more rapid decline. Under USDD 2.0, tokens are minted when users lock TRX, staked TRX or USDT in collateralized vaults. A single Smart Allocator vault held about $990 million in debt at a 100% collateral ratio, and produced $9.11 million of the project's $9.70 million third-quarter revenue, about 94%. Demand has been yield-driven: USDD Earn paid promotional rates up to 20% APY from February 2025, and by late January 2026 the yield-bearing sUSDD paid 8% on Ethereum with $314.5 million staked. DIA estimates at least 30.1% of circulating USDD sits in lending markets, and the ten largest addresses hold 77.5% of supply.
At the end of October, USDD reported $2.21 billion in reserves and a 146.99% collateral ratio, though no independent auditor has attested the figures. The token remains concentrated on TRON, with about 22% of supply, or $329.94 million, circulating on Ethereum as of October 29. The next hard data will come with the fourth-quarter treasury report in January 2027, which is also significant for JST holders: under a buyback plan approved on JustLend, any USDD multichain revenue above $10 million, after TRON subsidies, is directed to a pool that buys and burns JST.
Broader stablecoin data also shows a tension between trading-led demand and payments infrastructure. While speculative stablecoin balances shrink, payment rails continue to develop, with reports citing Bitso Business payment volumes and USDC's rollout through Samsung Wallet on Solana. That means the contraction in trading liquidity may not fully capture stablecoins' expanding role in real-world settlement.
