Core Insights - The report by Messari titled "USDD 2.0 - New Horizons" analyzes the latest developments and strategic layout of the decentralized stablecoin USDD, highlighting its self-sustaining and growth-oriented on-chain financial system through innovative designs like over-collateralization, the Peg Stability Module (PSM), and the Smart Allocator [1][3]. Group 1: USDD's Performance and Mechanisms - Since its relaunch in January 2025, the USDD 2.0 protocol has shown robust growth, with total collateral value exceeding $620 million as of early September 2025, consistently maintaining an over-collateralized state above the circulating supply of USDD [3]. - The PSM is identified as a core mechanism for maintaining USDD's price stability, allowing users to exchange USDT/USDC for USDD at a 1:1 ratio, effectively anchoring its price around $1 through an arbitrage mechanism [6][10]. - In the third quarter, the value of USDD's collateral increased by 5%, outpacing the 3% growth in stablecoin supply, indicating a strengthening collateralization rate during the transition to a multi-chain deployment [6]. Group 2: User Engagement and Demand - User exchanges of USDT/USDC for USDD surged from $1.15 billion in the second quarter to $2.5 billion, marking a 117% quarter-over-quarter increase, while redemptions rose from $1.24 billion to $2.7 billion, a 119% increase, demonstrating PSM's effectiveness in managing large demand fluctuations [6][8]. Group 3: Innovation and Security - The Smart Allocator mechanism is designed to invest reserve funds into low-risk DeFi protocols to generate real returns, transitioning USDD from a subsidy-driven model to a self-sustaining economic engine [8]. - USDD's new contracts on Ethereum have undergone a comprehensive audit by CertiK, ensuring security for large-scale applications and enhancing its stability within the DeFi ecosystem [10].