Preface

Although the total market value of cryptocurrencies has evaporated nearly $900 billion since Trump took office, with altcoins entering a deep bear market, the total market value of stablecoins has continued to reach historical highs. According to defillama's data, the current total market value is $230.45 billion, increasing by $2.3 billion in the past seven days. Compared to the same period last year, the stablecoin market value has grown by 56%. In the overall market value, Tether's USDT stablecoin dominates, with a market value of nearly $144 billion, accounting for 62.6%, followed by Circle's USDC, with a market value of $59 billion.

Stablecoins are a type of cryptocurrency designed to maintain a relatively stable value, with the purpose of minimizing the high volatility inherent in the crypto asset market. Unlike traditional cryptocurrencies such as Bitcoin, the value of stablecoins is typically pegged to a stable asset, such as the US dollar, euro, or gold. This characteristic makes them a key tool in the cryptocurrency ecosystem.

Against the backdrop of crypto assets and US stocks experiencing downward volatility and facing pressure, the rise of stablecoins is considered a manifestation of consolidating US dollar hegemony. At the White House's first crypto summit, Trump stated that he hopes to receive a stablecoin legislative bill before the August congressional recess to advance federal government crypto regulation reforms and reiterated his desire for the US dollar to "maintain its long-term dominance".

Besides the United States, other countries and regions, including Hong Kong, Japan, and Thailand, are also making efforts to adopt stablecoins. On July 18 last year, the Hong Kong Monetary Authority announced a "sandbox" for stablecoin issuers; on March 10 this year, the Thai Securities and Exchange Commission confirmed USDT and USDC as compliant cryptocurrencies; on the same day, the Japanese cabinet announced approval of a proposal to reform crypto brokerage and stablecoin-related laws, allowing crypto companies to operate as "intermediary businesses".

According to the Financial Times, some of the world's largest banks and fintech companies are eager to launch their own stablecoins, aiming to capture market share in cross-border payments, which they expect will be reshaped by cryptocurrencies. For example, JD Technology, Roundcube Innovation Technology, and Standard Chartered Bank are advancing a Hong Kong dollar stablecoin project; PayPal issued the PYUSD stablecoin; Stripe acquired the Bridge stablecoin platform; Revolut is exploring the possibility of issuing a stablecoin; Visa is using stablecoins for payments and global business.

With the stablecoin layout of governments, banks, and fintech companies across various countries and regions, the crypto market may be about to usher in an unprecedented stablecoin bull market.

Stablecoin Classification

Stablecoins can be classified based on their collateral type intoFiat-Collateralized Stablecoins,Crypto-Collateralized Stablecoins,Algorithmic Stablecoins, andEmerging Stablecoins.

Emerging stablecoins generally combine fiat collateral, cryptocurrency collateral, and algorithmic adjustment. Currently, the projects with high market attention are USDe and USD0.

USDe is a new synthetic dollar stablecoin launched by Ethena Labs. USDe achieves stability pegged to the US dollar at 1:1 through a Delta hedging strategy and minting-redemption mechanism. Users mint USDe on the Ethena frontend using various assets, which are converted to ETH LST in the backend, such as stETH, mETH, and wbETH, then deposited as collateral with a custodian, while simultaneously creating a short ETH position on centralized exchanges. This hedging creates a US dollar position, with USDe issued based on this position. Both long and short positions of USDe collateral generate yields, with spot long yields from Ethereum staking returns and futures short yields from funding fees and basis in derivatives positions, which are distributed to users staking USDe.

USD0 is the cornerstone of the Usual ecosystem, the world's first stablecoin aggregating multiple US Treasury token real-world assets (RWA). Unlike stablecoins like USDT and USDC, USD0's biggest selling point is its RWA backing, providing high security and a decentralized structure through short-term US Treasuries and repurchase agreements. Users can stake USD0 to mint bond tokens USD0++, and USD0++ holders can receive interest from the underlying RWA assets. On January 10, 2025, Usual officially modified the USD0++ redemption rules, changing from a 1:1 guaranteed redemption to conditional (1:1 but requiring burning part of the yield) and unconditional (guaranteed exit ratio of 0.87:1) redemption, triggering user panic and causing USD0++ to de-peg.

Whether it's the Delta neutral strategy used by USDe or the short-term US Treasury collateral used by USD0, both provide a way for stablecoins to generate interest. Previously, most stablecoins did not provide users with interest, which was the primary income source for projects like USDT and USDC. However, with the emergence of new stablecoins like USDe and USD0, providing interest to users will become the norm, similar to an on-chain money market fund.

Stablecoins and New Payments

Although the current payment field is still dominated by intermediaries charging high fees, stablecoins have actually become the biggest disruptor in the payment sector. In 2024, stablecoin payment settlement volume reached around $5.6 trillion, 20 times its 2020 volume, with 20 million active addresses transacting monthly on-chain and over 120 million addresses holding non-zero stablecoin balances.

As stablecoin usage expands globally, especially in emerging markets, it has significantly impacted traditional financial infrastructure, particularly in global payments. Current payment routes and information transmission protocols (such as ACH, SEPA, and SWIFT) constitute the global payment network. These intermediaries enable cross-regional, cross-time zone large-scale transactions and ensure relatively smooth payments, but also bring high intermediary fees and settlement times of several days. Stablecoins and blockchain technology provide a completely new payment route that can simplify payment clearing processes, making payments fast, cheap, and easily accessible.

In fact, stablecoins have become the most economical way to transfer (US dollars) and have many practical application scenarios. For example, individuals and businesses in Nigeria use stablecoins like USDT or USDC to remit money to relatives or business partners abroad, saving the complicated banking system processes and avoiding high foreign exchange conversion and transfer fees. Similarly, small and medium-sized enterprises in Indonesia use stablecoins for cross-border trade payments, improving transaction efficiency and increasing profit margins by reducing intermediary fees.

The underlying blockchain, as the cornerstone of stablecoin payments, is naturally developing stablecoin payments extensively. Different blockchain platforms offer varying speeds, costs, and security, directly affecting user experience and stablecoin use cases. In terms of stablecoin transaction volume, Ethereum, Tron, and Binance Chain top the list. However, from the development roadmaps of public chains, high-performance Layer1 Solana, Coinbase-backed Base, and the emerging RWA public chain Pharos all consider payments as a core strategic direction.

Summary

Stablecoins represent a significant innovation in the cryptocurrency field, solving the volatility problem of crypto assets and providing new possibilities for the global financial system, especially with increasingly widespread application in global payments.

Looking to the future, stablecoins will play an increasingly important role in the digital financial ecosystem. Regulators' attitudes toward stablecoins will be a key factor in their development. Central banks and financial regulatory bodies are closely monitoring stablecoins and gradually developing corresponding regulatory frameworks.

Behind the regulation, we actually see a fact: cryptocurrency's biggest opportunity might not be viewing it as cryptocurrency, but as a new payment method. In this stablecoin bull market, we will see how stablecoins will consume the traditional payment market.