The stablecoin showdown

Opinion by Adrien Stern, founder and CEO of Reveel

Stablecoins have been hailed as crypto’s killer use case. Businesses, banks, payment providers, projects, tech giants and governments are getting on board with leveraging crypto without its volatility. For consumers, stablecoins are a way to seek refuge with gains during bear markets and regulatory uncertainty. 

The recent acquisition of Bridge by Stripe for $1.1 billion proves that stablecoins are a bright spot in the sector and are here to stay. They’re not merely another fast fad that loses its sizzle as the market swings. Stablecoins are an essential and reliable digital asset in the future financial ecosystem. 

The question then becomes not if but who. In this sector-wide arms race, will one stablecoin dominate, or will a multi-stablecoin ecosystem succeed? 

The industry has a growing graveyard of stablecoins. According to DefiLlama, only two out of 200 stablecoins had a market cap of over $10 billion in 2024. Regulations, economic conditions and public sentiment shape the future stablecoin ecosystem. It’s still the early days of the grand scheme of stablecoins. 

The stablecoin value proposition 

Everyone wants a stablecoin. Fintech giants like PayPal, Robinhood and Revolut have launched their stablecoin, or plan to, soon. Financial institutions like BlackRock, Sony Bank and BBVA are getting into the game. Even the state of Wyoming has announced plans to issue its stablecoin. The stablecoin rush reveals desires from all corners of tech and finance to have control over a digital currency to drive user adoption and revenue. 

Stablecoins facilitate cheaper trade, payments and cross-border transactions. Issuers can earn interest on reserves held in treasuries, banks or other low-risk assets. Stablecoins are heavily used in lending protocols and earn additional fees. Collaborations with fintech firms and payment processors drive more use cases. 

Established brands, including Tether and Circle, have built significant market trust, creating barriers for new entrants. The stability and transparency of reserve backing are critical factors that influence user choice. 

Recent: SCB 10X debuts Rubie Wallet with Thai baht and US dollar stablecoins

The leading players can be grouped into two categories: dominant forces and the new entrants/unexpected challengers. The dominant forces include Tether’s USDt (USDT), Circle’s USD Coin (USDC) and MakerDAO’s Dai (DAI). USDT, the first mover, is notorious for regulatory scrutiny yet remains the most 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 crypto assets rather than fiat. 

The emerging players holding a slice of the pie include government-backed digital currencies (CBDCs), algorithmic stablecoins such as Frax (FRAX) and GHO, and fintech stablecoins like PayPal’s PYUSD (PYUSD). 

The case for a unipolar system 

A dominant stablecoin benefits from increasing adoption, making it more valuable and liquid. Trust in a single issuer can drive a winner-takes-all outcome. The first stablecoin to secure full regulatory approval globally could set the standard. 

It’s essential to recognize that, like chains, different stablecoins serve varied needs — payments, decentralized finance (DeFi), remittances and cross-border trade. Local preferences and regulations may lead to region-specific leaders, such as Asia favoring CBDCs and South America shielding against inflation. Interoperability and crosschain solutions may support a coexistence model. The ability to transact with different stablecoins and set up automatic swaps is the user experience of the future. 

A secure stablecoin ecosystem is critical for investors, consumers and the broader financial space. Investors require exposure to the growing stablecoin market through investments in issuers and associated technologies. There are, however, risks of regulatory crackdowns, reserve management and technological failures, which encourage diversified bets across multiple stablecoins. 

For consumers, stablecoins provide cheaper and faster payments, particularly for international transactions. The access to DeFi via a gateway to lending, borrowing and earning interest outside traditional banking continues to be a unique advantage. It’s also a safer haven to house earnings when compared with volatile cryptocurrencies and coins. 

Stablecoins pose a possibility of reforming the financial system, and institutions are waking up to it. Payment companies like Stripe — through its acquisition of Bridge — or Visa, are offering stablecoin issuance as a service, helping firms launch their own tokenized assets. A proliferation of stablecoins is likely in the coming months. Whether they survive will depend on the infrastructure developed to support a multi-stablecoin economy.  

With a growing list of innovations and initiatives, it’s clear that the stablecoin war is more than a crypto conflict. It’s a battle over who will usher the world into the next iteration of digital money. The space can use more people closely following the stablecoins rather than the shitcoins. 

Stablecoins are here to stay, and how the ecosystem evolves will redefine financial services for everyone, everywhere.  

Adrien Stern is the founder and CEO of Reveel, an omnichannel payments infrastructure that enables one-click crosschain payments and connects people across borders and networks. Before founding Reveel, Adrien led the digital transformation team at BNP Paribas CIB. He was previously a venture builder and owns another company — Bridge Music — a record label and recording studio. Adrien has a bachelor’s degree in sciences of management from the University of Lausanne and a master’s in business administration from Esade. 

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.