Author: Ignas

Compiled by Tim, PANews

The total supply of stablecoins has reached a new historical high, growing 44% over the past two years.

What investment strategies will benefit from the large-scale adoption of stablecoins?

As background, the Trump administration has set August as the deadline for passing a stablecoin bill.

In this trend, mainstream traditional financial institutions are actively deploying in the stablecoin market. Just to name a few:

• ​Bank of America: Open to launching its own stablecoin if regulations allow
• ​Standard Chartered: Plans to launch a stablecoin pegged to the Hong Kong dollar
• ​PayPal: Expanding the market for its stablecoin PYUSD by 2025
• ​Stripe: Acquired the stablecoin infrastructure platform Bridge for $110 million
• ​Revolut: Exploring the possibility of issuing a stablecoin
• ​Visa: Integrating stablecoins into its payment system and global business network

Previously, the increase in stablecoin supply often pushed up cryptocurrency prices, as people would hold these stablecoins in the short term mainly for speculative trading.

Now, the application of stablecoins has gone beyond speculation. For example, SpaceX uses stablecoins to repatriate its Starlink sales funds in Argentina and Nigeria, and the AI company ScaleAI also uses stablecoins to pay overseas contractors.

The simplest investment strategy is to bet on the tracks where mainstream institutions are likely to issue new stablecoins.

Ethereum, Base, TRON and Solana are the main public chains for stablecoin issuance currently.

It's worth noting that although SOL has dominated this bull market, the growth of stablecoins on the Solana chain has been relatively slow. Currently, only the Base chain has successfully taken a seat at the stablecoin competition table with USDC.

Since the Base chain itself does not issue tokens, Coinbase's stock (Nasdaq: COIN) may become a potential target.

Another strategy is to wait for the IPO of USDC issuer Circle, or choose to invest in the stocks of Visa and PayPal.

In addition to trading and payments, stablecoins are also used to earn yields in DeFi:

Therefore, if the supply of stablecoins continues to expand, mature DeFi protocols may become the main beneficiaries:

- Aave/Morpho/Euler/Fluid

- Uniswap/Curve

- Maker

- Ethena

Increased stablecoin supply → Increase in total value locked (TVL) on-chain → Growth in protocol fee revenue → Increase in token valuation (especially those with revenue sharing mechanisms)

Yield is a key factor influencing the dynamics of the stablecoin market:

For example: PayPal's stablecoin PYUSD has already been launched on Solana and Ethereum, but its growth has been relatively slow.

Solana once challenged Ethereum's position by using the high annualized yield of the Kamino protocol to incentivize the increase in stablecoin supply, but its on-chain stablecoin supply subsequently stagnated, while Ethereum's supply continued to grow.

Cross-chain platforms and oracles will benefit from the growth of multi-chain stablecoins, as they bring increased transaction volume and fee revenue:

- Chainlink

- LayerZero/Socket

- Debridge/Across, etc.

However, the most tempting investment opportunities may come from yet-to-be-launched new infrastructure, consumer-level applications, and yield-generating products, as emerging tokens often generate higher market attention.

When cryptocurrency prices rebound, the super-narrative of stablecoins will fully erupt, which is also an area I (as a passionate researcher) will invest more time in.

In any case, the large-scale adoption of stablecoins is super bullish for the cryptocurrency market:

The demand for block space on public chains like Ethereum, Solana, and Base will surge, so betting on smart contract public chains is the most fundamental investment strategy.

What investment strategy do you have in mind?