Opinion of Adrien Stern, founder and CEO of Reveel
Stablecoins have been hailed as the leading practical application of cryptocurrencies. Businesses, banks, payment providers, projects, tech conglomerates, and governments are increasingly interested in using cryptocurrencies without experiencing price volatility. For consumers, Stablecoins are a means to seek safe haven with high yields during bear market and regulatory turbulent periods.
Stripe's acquisition of Bridge for $1.1 billion demonstrates that Stablecoins are a bright spot in this field and will continue to exist. They are not just a passing trend that will fade away as the market evolves. Stablecoins are an important and reliable digital asset in the future financial system.
The question is not whether a stablecoin will dominate, but who will make it happen. In this industry-wide arms race, will a single stablecoin emerge victorious, or will a multi-stablecoin ecosystem succeed?
The industry is witnessing a slew of stablecoin failures. According to defillama, only two out of 200 Stablecoins had a market capitalization exceeding $10 billion in 2024. Regulations, economic conditions, and public sentiment will shape the stablecoin ecosystem of the future. These are still the early days of the grand plan behind Stablecoins.
The Value of Stablecoins
Everyone wants a stablecoin. Fintech giants like PayPal, Robinhood, and Revolut have launched or plan to launch their own stablecoins. Financial institutions like BlackRock, Sony Bank, and BBVA are getting in on the action. Even the state of Wyoming has announced plans to issue its own stablecoin. The stablecoin frenzy reflects the ambition from every corner of the tech and finance industries to control digital currencies and drive user adoption and revenue growth.
Stablecoins help reduce the cost of commercial transactions, payments, and cross-border transactions. Issuers can earn yield from the reserves held in treasuries, banks, or other low-risk assets. Stablecoins are widely used in lending and earning fee prototypes. Partnerships with fintech companies and payment processors further drive use cases.
Leading brands, including Tether and Circle, have built significant market trust, creating barriers for newcomers. The stability and transparency of reserves are key factors influencing user choice.
The main competitors can be divided into two groups: the dominant forces and the new/unexpected challengers. The dominant forces include Tether's USDt (USDT), Circle's USD Coin (USDC), and MakerDAO's Dai (DAI). USDT, the pioneer, is notorious for legal scrutiny but remains the most widely used due to deep liquidity. USDC is known for regulatory compliance and is favored by institutions. DAI is the leading decentralized stablecoin, backed by a basket of cryptocurrencies instead of fiat.
The new players holding a slice of the pie include government-backed digital currencies (CBDCs), algorithmic stablecoins like Frax (FRAX) and GHO, and fintech company stablecoins like PayPal's PYUSD (PYUSD).
The Investment in Monopolistic Systems
A dominant stablecoin could benefit from increasing adoption, making it more valuable and liquid. Trust in a single issuer could lead to a "winner-takes-all" outcome. The first stablecoin to receive global regulatory approval could potentially set the standard.
It should be recognized that, like chains, different stablecoins serve different needs - payments, DeFi, savings, and cross-border transactions. Local preferences and regulations may lead to regional leaders, such as Asia favoring CBDCs and South America protecting against inflation. Interoperability and cross-chain solutions could support a coexistence model. The ability to trade between different stablecoins and perform automated swaps is a future user experience.
A safe stablecoin ecosystem is crucial for investors, consumers, and the broader financial space. Investors demand access to the evolving stablecoin market through investments in issuing companies and related technologies. However, there are risks of regulatory crackdown, reserve management, and technological failures, which encourage diversified bets across multiple stablecoins.
For consumers, stablecoins provide faster and cheaper payments, especially for international transactions. Access to DeFi through the gateways of lending, borrowing, and earning interest outside traditional banks continues to be a unique advantage. It is also a safer place to store profits compared to volatile cryptocurrencies and coins.
Stablecoins present the potential to reform the financial system, and institutions are waking up to this. Payment companies like Stripe - through the acquisition of Bridge - or Visa are providing stablecoin issuance services, helping companies launch their own tokenized assets. An explosion of stablecoins may occur in the coming months. Their survival will depend on the development of infrastructure to support a multi-stablecoin economy.
With the growing list of initiatives and innovations, it is clear that the stablecoin war is not just a cryptocurrency conflict. It is a battle over who will bring the world into the next version of digital money. The space needs more focus on Stablecoins rather than worthless coins.
Stablecoins are here, and the evolution of this ecosystem will reshape financial services for everyone, everywhere.
Adrien Stern is the founder and CEO of Reveel, a multi-channel payment infrastructure that enables transactions across chains with a single click and connects people across borders and networks. Prior to founding Reveel, Adrien led the digital transformation team at BNP Paribas CIB. He was previously a serial entrepreneur and owned another company — Bridge Music — a music label and recording studio. Adrien holds a bachelor's degree in management science from the University of Lausanne and an MBA from Esade. Bitcoin News Aggregator
