Source: 1confirmation Newsletter; Translated by: AIMan@Jinse Finance
MakerDAO, Basis, Bridge. Over the past decade, 1confirmation has supported several stablecoin projects, some failed, some moderately successful, and some achieved breakthrough progress. These all validated our long-held belief: stablecoins represent one of the first products in the cryptocurrency field that truly goes beyond speculation and meets market needs.
Background Matters
1confirmation has bet on stablecoins from day one. Not because they were hot at the time, but because they showed signs of real-world applications beyond pure speculation.
In 2017, 1confirmation invested in MakerDAO, a decentralized collateralized stablecoin still operating today. In 2018, 1confirmation invested in Basis, an algorithmic stablecoin that ultimately failed and returned investors' funds. In 2022, 1confirmation invested in Bridge, which was acquired by Stripe for $1.1 billion, becoming one of the largest cryptocurrency acquisitions to date.
One failed, one succeeded, and one achieved a breakthrough. They all validated an argument 1confirmation has held for years: stablecoins are among the first practical use cases of cryptocurrency.
North Star
1confirmation believes that the on-chain total supply of stablecoins is key to driving cryptocurrency adoption. Currently, the market size has reached $247 billion, exceeding the peak of $187 billion in May 2022. Since the beginning of 2024, the market size has grown by 90%.
This North Star metric represents true cryptocurrency adoption and indicates whether we are gaining net new users.
Why Now
From a macro perspective, stablecoins have become a strategic necessity for US economic dominance:
US Dollar Export Problem: Foreign central banks' US dollar reserves have dropped from 65% in 2015 to 57% today. BRICS countries and recent tariff measures are accelerating de-dollarization. Stablecoins solve this by directly distributing dollars to global populations via the internet, without government support.
Treasury Buyer Solution: Tether is currently among the top 20 US Treasury buyers globally, surpassing Germany and Australia. As traditional buyers like Japan and China reduce holdings, stablecoin issuers are becoming a crucial funding source for US government operations.
Legislative Tailwinds: Upcoming stablecoin legislation (Genius Act) will allow US banks and major players like Meta to launch their own stablecoins, significantly expanding the market.
Stablecoin Native Applications
While all these macro contexts are interesting, how can you actually make money? 1confirmation believes we are about to see an explosive growth in stablecoin native applications, far beyond current expectations.
Consumer Applications: Polymarket has proven that stablecoin native applications can achieve mainstream adoption, processing billions in transactions while conveying truth and information to the world. This is just the beginning.
Emerging Markets: Cryptocurrency's long-standing promise was financial inclusion for billions without bank accounts. However, we only got speculation. Stablecoins finally realize the original vision. We recently invested in Karsa, a new stablecoin bank for Pakistan and Nigeria. With inflation rates as high as 32%, dollar circulation is crucial for financial stability. Karsa's intent is not to make the rich richer, but to provide financial tools for those who need them most.
Geographic Expansion: Currently, 99.9% of stablecoins are pegged to the US dollar, but this will change. In the next five years, as global regulatory frameworks improve, stablecoins pegged to euros, pounds, and other fiat currencies are expected to grow significantly.
The Path Forward
Stablecoins represent the clearest path for cryptocurrency to reach mainstream application. Unlike other speculation-driven crypto narratives, stablecoins truly solve real problems for people today.
Macroeconomic tailwinds are stronger than ever. Technology has been validated. Regulatory clarity is imminent.
We are seeking founders who understand that the greatest opportunity is to build stablecoin native applications and bring stablecoins to the next billion users.
