Tether co-founder launches rival stablecoin that offers yield

Tether co-founder Reeve Collins is launching a decentralized stablecoin that will compete with the original dollar-pegged token he helped create, upping the ante in a corner of the cryptocurrency market that has seen intense competition. 

According to a Feb. 18 Bloomberg report, Collins is now chairing Pi Protocol, a self-proclaimed decentralized project that will launch on the Ethereum and Solana blockchains later this year. 

As Bloomberg reported, Pi will use smart contracts to allow parties to mint the USP stablecoin in exchange for the yield-bearing USI token. The stablecoin will reportedly be backed by bonds and other real-world assets.

Although the stablecoin’s name implies that it will be pegged to the US dollar, there were no details about the fiat currency or currencies it represents.

Collins and his partners initially developed Tether, the issuer of USDt (USDT), in 2014 before selling it to the operators of crypto exchange Bitfinex one year later. Since then, the value of USDt has grown from less than $1 billion to $142 billion. 

Prior to announcing Pi Protocol, Collins had already hinted at a yield-bearing stablecoin offering, telling Cointelegraph that yield-bearing assets will attract more investors who want to earn interest on their fiat-pegged tokens. 

Related: Stablecoin market cap surpasses $200B as USDC dominance rises

Tether sees growing competition

Pi Protocol will enter an increasingly competitive stablecoin market that includes Tether and other industry heavyweights such as Circle’s USD Coin (USDC), Ethena’s USDe (USDe), and Dai (DAI).

According to DefiLlama, there are more than $225 billion worth of stablecoins in circulation. The growth of USDC has outpaced Tether’s USDt early this year, while Ethena’s USDe overcame DAI to become the third-largest stable asset by market capitalization. 

Stablecoins underpin the cryptocurrency market by offering users liquidity and transactional capacity when buying and selling digital assets. Stablecoins are also becoming a popular option for cross-border remittances, offering a cheaper and more efficient way to send money overseas.

These use cases were highlighted in a recent ARK Invest report, which showed that the value of stablecoin transactions reached $15.6 trillion in 2024 — outpacing both Visa and Mastercard.

Magazine: Bitcoin payments are being undermined by centralized stablecoins