Author: Poopman
Compiled by: Deep Tide TechFlow
Stablecoins have recently become the focus of the industry, with a constant stream of related news:
(Genius Act) Passed
Stripe Acquires Privy and Bridge
$crcl stock price has increased 7 times from the IPO price
Plasma Quickly Completes $1 Billion Deposit Cap
Tether Becomes the 19th Largest Entity Investing in US Treasury Bonds
Mastercard Partners with Chainlink to Allow Users to Purchase Stablecoins on Decentralized Exchanges
Banks, Big Tech Companies, and Asian Regions Rush to Launch Their Own Stablecoins
Regulatory issues that were once considered an obstacle to the development of stablecoins have now become a driving force. Practitioners in the traditional finance (TradFi) field have hesitated about the stablecoin field in the past due to lack of understanding, lack of consensus, and insufficient compliance tools. However, as the stablecoin regulatory framework gradually becomes clear, the original resistance has become a catalyst.
According to Fireblock data, the regulatory framework has increased corporate confidence in stablecoins, with growth reaching 80%. At the same time, 86% of companies have already established stablecoin infrastructure, indicating that banks and institutions have long been preparing for this shift.
Why are stablecoins suddenly the focus of the industry?
The answer is simple: they solve practical problems. The significant advantages of stablecoins include:
Instant and Low-Cost Cross-Border Transactions: Provide permissionless access to USD for emerging markets, while potentially leading to more efficient on-chain foreign exchange markets.
Promote Demand for Treasury Bonds: Stablecoins can increase the demand for US Treasury bonds, and the United States is happy to strengthen the dominance of the US dollar and sell its debt in this way.
Thanks to the public attention attracted by the (Genius Act), I believe we are entering a new era - the next wave of payment-focused stablecoin applications will be driven by non-crypto native communities, which is the so-called 'mass adoption'.
The Next Step for Stablecoins
With the expected growth of stablecoins in payments, cross-border transactions, and personal banking, related businesses will usher in a large number of opportunities. Today, let's explore the next direction of stablecoin development.
In my opinion, the stablecoin ecosystem may develop in the following four directions in the future: payments, compliance, on-chain foreign exchange, and institutional yield expansion
More than just trading: Stablecoins are moving towards the mainstream market. From now on, their uses will go far beyond trading pairs, including payments, savings, and even new businesses previously constrained by T+1 settlement delays.
Compliance Tools: More mature and user-friendly compliance solutions (such as tax, fraud reporting, etc.) to help issuers comply with anti-money laundering (AML) and related policies.
24/7 On-Chain Foreign Exchange Market: A more efficient 24/7 foreign exchange market with instant settlement.
Growing Demand for Yield: As the ecosystem becomes increasingly fragmented, more Real World Asset (RWA) strategies, fixed income products, and aggregation products (such as indexes) will emerge.
More than just trading
The mission of stablecoins is simple: to provide crypto traders with volatility hedging tools and a safe haven for holding crypto assets. Fully reserved stablecoins represented by USDT have become the main trading pairs in mainstream exchanges due to their first-mover advantage. USDC followed closely behind and became the second most popular choice. In the early stages, the core function of stablecoins was to serve trading and hedging needs.
New Trends
In addition to trading, payment has become another core function of stablecoins. This trend has become more and more obvious in recent years. The Cryptocurrency Adoption Index Report in 2025 shows that among the 10 countries with the fastest growth in global crypto adoption, the growth of 8 countries is actually driven by peer-to-peer (P2P) transactions and remittance demand.
This growth is mainly concentrated in emerging markets, and the purpose of stablecoins is to provide these regions with permissionless access to USD, which is often difficult to achieve in low-income countries. For businesses in these regions, USD-backed stablecoins provide the necessary protection to hedge against the dramatic fluctuations of local currencies. As market confidence increases, I expect the adoption rate of stablecoins to increase further.
Trading View
Stablecoin Cross-Border Payments and E-commerce
Cross-border payments are another important application scenario for stablecoins, and their advantages are obvious: instant settlement, lower costs, higher transparency, and permissionless access to USD. These characteristics solve the problems of slow and opaque traditional cross-border transfer systems and release previously trapped capital for businesses.
A typical case is @ConduitPay, a cross-border payment solution supported by @dragonfly_xyz, which reported a surge in demand in the import/export business in Latin America and Africa, which drove a 16-fold increase in platform transaction volume and helped them achieve the milestone of annualized payment volume of $10 billion. This growth reflects the rapid increase in demand for stablecoin solutions in the field of cross-border payments.
At the same time, the e-commerce sector is also opening up new doors for stablecoins, mainly due to their ability to increase profits for merchants and payment processors. According to a16z crypto, retail giants like Walmart can reduce network fees by adopting stablecoin payments, increasing revenue by up to 62%. Payment processors such as Stripe can also obtain higher profit margins from stablecoin payments, which may further incentivize them to integrate stablecoin payment functions.
Stablecoins are unleashing potential in cross-border payments and e-commerce, injecting new vitality into the global business ecosystem.
https://a16zcrypto.com/posts/article/how-stablecoins-will-eat-payments/
Web2 payment giants are not only watching, they have already taken action, and stablecoin payments are about to be everywhere. Here are a few typical cases:
Shopify: Accepts USDC payments through Stripe.
Paypal: Launched a $1 billion market cap stablecoin, pyUSD, which can be used as a payment channel.
Walmart and Amazon: Plan to develop their own stablecoins.
With the gradual removal of regulatory barriers, stablecoins are practically ready for explosive growth. In the future, we will see:
A surge in cross-border stablecoin transfers in emerging markets;
More payments are made through USDC on chains such as SOL/Base, using CEX wallets, Phantom, Neo banks, or fintech applications;
Stablecoin payments in the e-commerce sector bring more sales.
This stablecoin revolution has just begun.
Compliance Tools
Trust is critical for enterprise adoption of stablecoins. As the GENIUS Act establishes a regulatory framework for stablecoin issuance in the US, I expect demand for compliance tools to grow as new issuers enter the market.
In order to understand the role of compliance tools in the stablecoin ecosystem, let's review some basics and background knowledge.
Although state regulations may vary, there are two main regulatory frameworks shaping the future of stablecoins: MICA and the GENIUS Act. Here is a table comparing the two frameworks (specific details are not elaborated in this article).
https://eu.ci/mica-vs-genius-act-2025/
The newly issued GENIUS Act regulatory framework mainly serves two key purposes: consumer protection and national security. Chainalysis has provided a concise summary of this, and the following is the basic content:
Consumer Protection
Reserve Requirements: Must be fully backed by highly liquid assets (such as Treasury bills with a maturity of no more than 93 days or cash).
Disclosure: Monthly disclosure of reserve composition, redemption policies, and related fees on the official website.
Restrictions: Prohibit the use of 'USG' or any 'legal tender' currency in marketing or promotional materials.
Bankruptcy Protection: In the event of bankruptcy, stablecoin holders have priority claim rights.
Prohibition of Yield: Issuers may not provide yield or interest on 1:1 backed stablecoins.
National Security Provisions
Bank Secrecy Act Compliance: Including anti-money laundering (AML), customer identification, transaction monitoring and record keeping, reporting any suspicious activity, etc.
Technical Execution Capabilities: Issuers need to have the ability to freeze and destroy tokens and be able to prohibit non-compliant foreign issuers from entering the US market.
Sanctions Enforcement Coordination: The Secretary of the Treasury needs to coordinate with stablecoin issuers as much as possible before preventing foreign entities from trading.
Companies need to have the following capabilities to become a 'certified' stablecoin issuer: identify, freeze, track, and publicly disclose reserves, and be able to communicate effectively with affected parties.
Compliance tool providers play a vital role in this process. For example, Chainalysis Sentinel can monitor 35 types of risky transactions in real-time. The platform provides APIs that allow issuers to freeze addresses, blacklist, stop transactions, mint, or destroy tokens when suspicious activity is detected.
In recent years, the importance of the stablecoin compliance layer has been increasing. Some sanctioned entities have begun to turn to stablecoins as a medium for transferring funds when they cannot obtain US dollars through traditional banking systems.
In addition, due to the price stability of stablecoins, funds from scams and money laundering are also partially stored in stablecoins. Data shows that the proportion of stolen funds stored in stablecoins has jumped from 20% a few years ago to more than 50% today.
For this reason, a strong compliance layer is crucial for the stablecoin ecosystem. It can help identify, filter, and report suspicious transactions, providing businesses and new users with the confidence the system needs.
Chainalysis Crime Report
The application of compliance tools is not limited to existing infrastructure, but all platforms involving stablecoins need to gradually transition to compliance-friendly.
For example, Coinbase recently acquired Liquifi Finance. Liquifi is a platform that handles token vesting, airdrops, and even salary payments in stablecoin form. They started offering tax reporting tools and ensuring that their tools comply with the compliance requirements of different countries.
Similarly, Fireblocks has developed a set of tools similar to Chainalysis, but with richer functions, including configurable compliance policies, integrated KYT (Know Your Transaction), AML (Anti-Money Laundering), and travel rule compliance functions. In addition, other industry participants such as TRM Labs, Elliptic, and Polyflow are also building the compliance layer for stablecoins.
With the application and popularization of stablecoins worldwide, compliance tools will become the cornerstone of industry development. It can not only cope with the challenges of sanctions and illegal funds but also provide a solid foundation of trust for the widespread adoption of stablecoins. The compliance ecosystem of stablecoins is developing rapidly and will be more secure and standardized in the future.
On-Chain Foreign Exchange Market
As US regulators approve the use of stablecoins, more countries will inevitably follow suit, promoting the digitalization of stablecoins and their national currencies. This transformation will naturally give rise to the Onchain FX Market, bringing two significant advantages: 24/7 market and increased retail participation due to high accessibility.
In my opinion, the on-chain foreign exchange market can be divided into two main levels: issuers and trading platforms. To simplify the discussion, we will not cover the on/off ramp between fiat currencies and stablecoins, as this topic needs to be analyzed separately based on the specific situation of different countries.
Currently, USD stablecoins dominate the market with a share of 99.79%, while Euro stablecoins (EURC) account for only 0.2%. Major non-USD asset issuers include Circle, Paxos, and Tether. However, in the near future, compliant banks and institutions may also launch their own stablecoins, bringing more choices to the market.
As demand changes, the market for non-USD stablecoin transactions is gradually expanding. Most USD/non-USD transactions occur on automated market maker (AMM) platforms, especially Aerodrome and Pancakeswap. It is worth noting that exchanging USDC for EURC on Aerodrome is even more competitive than traditional cross-border payment platforms such as Wise - even considering slippage and transaction fees (excluding fiat-to-stablecoin conversion fees), the exchange cost on Aerodrome is still about 30 basis points cheaper.
Due to competitive exchange rates and economic uncertainties (such as the impact of the Trump era), we are starting to see a growth trend in EURC, with its daily active addresses doubling from 600 in February of this year to 1300. At the same time, new stablecoins such as the Canadian Dollar (CAD) and the Brazilian Real (BRZ) are also entering the market, although their market share is currently small, they have initially formed an influence.
With the digitalization and compliance of the global economy and stablecoins, the on-chain foreign exchange market is expected to become an important complement to traditional financial markets. It can not only provide 24/7 trading services but also attract more retail users to participate, further promoting the digitalization and circulation efficiency of global currencies. The future of stablecoins will not be limited to the US dollar but will gradually expand to more national currencies to achieve true globalization.
On-chain Foreign Exchange Market
While stablecoin issuers (such as Tether, Circle, Paxos), banks, and fintech companies are promoting the popularization of stablecoins, some on-chain projects are also trying to incorporate "DeFi" elements into the field of foreign exchange trading to promote innovation.
For example, Injective provides a 24/7 market and supports trading in Euros (EUR) and British Pounds (GBP) with up to 100x leverage; while MentoLabs uses CDP (Collateralized Debt Position) technology, allowing users to directly hold underlying assets while achieving multi-currency exposure. These innovations not only provide users with more trading opportunities but also open up new yield farms.
Despite the promising prospects of the on-chain foreign exchange market, it currently faces two major obstacles:
Insufficient on-chain liquidity: Currently, on-chain liquidity is still relatively scarce, with the largest single pool containing only about $1.3 million EURC, which is clearly not healthy for large-scale transactions.
Friction in fiat-to-stablecoin conversion: Inefficient conversion between fiat (banking system) and stablecoins remains a major obstacle for on-chain foreign exchange markets competing with traditional foreign exchange systems.
The Era of High-Yield Stablecoins
Whether it is DeFi or personal finance, the yield market for stablecoins is becoming the focus of the crypto space. In the future, anyone holding USDC may think about how to generate income from idle capital. Although regulation mainly benefits payment stablecoins, the growth of the yield market driven by stablecoins cannot be ignored.
In the past year, yield-bearing stablecoins (YBS) such as Ethena and Sky have seen their market capitalization grow sixfold to $6 billion. At the same time, the demand for leveraged exposure and yield farming has been a major catalyst for lending protocols (such as Aave, Euler, and Syrup) reaching record highs in Total Value Locked (TVL).
Looking back at the DeFi summer, we once enjoyed the high returns brought by flywheel token economic design, but its sustainability often depends on the token price itself. When the token price falls, the protocol may stop running or even crash directly.
With the success of Ethena, the CeDeFi (Centralized and Decentralized Finance) model is becoming increasingly popular. Depositors lend stablecoins to the team, which generates actual trading income through off-chain strategies. This model has opened the era of YBS, and projects create income by running on-chain and off-chain strategies. Although this approach gets rid of the limitation of token price as the sole reason for using the protocol, it also reduces the value accumulation of the token itself.
The most common yield-generating strategies on the market currently come in three forms:
Short-term Treasury Bills (T-bills)
Delta Neutral Strategy
Money Market Strategy
While there are many other strategies, these are considered the market-proven 'classic yield' methods. Yield-bearing stablecoin strategies collectively generate approximately $1.5 million in revenue daily, and this trend continues to grow healthily.
RWA Strategy and Money Market
Yield Bearing Stables are just the tip of the iceberg.
In the next stage of the yield market, TradFi's RWA strategies combined with DeFi elements (such as circular investment) will attract a large number of institutions and funds.
As a recent example: ACRED (Apollo Diversified Credit Securitize Fund) investors can deposit $ACRED into the Morpho Blue market and borrow USDC by pledging it as collateral. Borrowers can then use the borrowed USDC to reinvest in ACRED, forming a leverage loop. In this setup, ACRED investors enjoy leveraged returns, while USDC providers (retail users or funds) earn interest paid by ACRED.
Here is a great example provided by Gauntlet and @redstone_defi.
RWA Strategy
This is just one example. As traditional financial institutions gradually realize that they can bring complex yield strategies and asset tokenization products on-chain and borrow stablecoins in this way, the market size is expected to continue to expand. As long as the underlying assets (such as USCC with an annualized yield of 7.7%) can provide sustainable and attractive returns for qualified investors, the market potential is almost limitless.
This new type of yield source is generated by tokenized RWA assets and relies on leverage expansion.
However, for new users, directly providing liquidity for different strategies may seem complicated. Therefore, I think the vault platforms that are most suitable for setting up these strategies include:
@upshift_fi
@MorphoLabs
@eulerfinance
@veda_labs
@maplefinance
@NestCredit
These platforms are working hard to maintain compliance while meeting institutional needs. However, the legal guidance for these products is still unclear, and legal and compliance risks are still one of the major obstacles.
Fragmentation
As the number of yield strategies and projects increases (there are 50+ projects and growing every day), the market is becoming more and more complex and fragmented.
New users often don't know where to deploy stablecoins to get the best returns, nor do they know how to allocate portfolios based on risk adjustment. In addition, many excellent strategies lack public exposure and need more attention.
In this case, an aggregation platform or unified 'yield' page (preferably with a risk disclosure dashboard) can connect yield farming users with powerful yield strategies.
We need a product similar to Binance Earn, but it is on-chain with higher transparency and detailed risk disclosure.
Currently, projects like @capmoney_, @Perena__, and strategy curator @gauntlet_xyz are building such aggregation platforms. These platforms help users easily find, manage, and deploy funds for yield farming by abstracting complex yield strategies. Users can access the best yields (whether on-chain or off-chain) with just 'one click,' paying only a small management fee.
Cap Money
Cap Money integrates all the top on-chain and off-chain yield strategies on the megaeth platform and unifies their exposure into a stablecoin or anchor asset. This asset is not only compatible with any DeFi protocol but also achieves high composability.
The allocation of funds depends on the performance of the strategy, forming a self-reinforcing market where only the most competitive yield strategies can survive. This mechanism ensures that capital flows to the best-performing strategies, thereby optimizing the user's yield experience.
However, the widespread adoption of stablecoins is inseparable from trust mechanisms. To this end, Cap Money has pioneered a completely new market, allowing asset holders (restakers) to delegate assets to strategy providers through EigenLayer, providing 'trust' to stablecoin holders. In return, these asset holders receive a portion of the proceeds to compensate them for the trust they provide.
A very interesting idea to 'safely' aggregate returns.
Perena
SOL is known for fast and low-cost transactions, making it an ideal blockchain for daily stable payments and on-chain foreign exchange markets.
Perena, leveraging the high-speed and low-cost advantages of the SOL blockchain, is committed to building a unified stablecoin liquidity layer - StableBank. By integrating the on-chain liquidity of brand stablecoins such as USDC, USDT, PYUSD, BENJI, AUSD into an automated market maker (AMM) and representing it with the receipt token USD*, Perena provides the best exchange rates for stablecoin swaps on the SOL chain.
In the upcoming Perena v2, they will add smart routing functions to scan all liquidity pools and over-the-counter (OTC) platforms to ensure that users get the best exchange rates (even including non-SOL chains). In addition, Perena will also support multiple currencies (such as EURC, GBP, etc.) and cross-chain exchange functions to prepare for the large-scale adoption of stablecoins.
But USD is not only a swap engine, it is also a savings and yield platform. By partnering with 20+ projects, Perena's StableBank network offers USD holders the best yields and strategies, connecting strategies that need public attention with stablecoin farming users seeking yield through a single interface.
Stablecoin Network
Gauntlet USD Alpha
Gauntlet USD Alpha ($gtUSDa) is a new product launched by the Gauntlet team, implementing off-chain strategies on the blockchain through the vault infrastructure developed by Aera Finance. This vault is managed by a 'Guardian' (designated executor) and aims to help users achieve on-chain yield goals.
The core goal of Gauntlet USD Alpha is to dynamically allocate depositors' stablecoins to the highest yielding lending markets and automatically adjust positions according to risk guidelines.
In backtesting, Gauntlet's risk-adjusted strategy (Base + ETH) based on Morpho outperformed Vaults.fyi's benchmark yield (7.76% Alpha yield vs. 4.46% benchmark yield). Currently, the vault is online and generating a 7.2% yield, mainly allocated to $midasUSD and $gtusdcf.
Gauntlet USD Alpha provides an efficient platform for passive farming users seeking risk-adjusted returns by abstracting complex yield discovery and risk management. This innovation not only optimizes stablecoin yield strategies but also promotes transparency and user-friendliness throughout the DeFi ecosystem.
Disclaimer: The author has invested in Cap and Perena
Conclusion
Stablecoins are ushering in unprecedented development opportunities and becoming an important part of the global financial ecosystem.
With the improvement of the regulatory framework, the mainstream process of stablecoins is accelerating. For example, the Genius Act has provided a clear compliance framework for traditional finance (TradFi), financial technology (Fintech), and payment systems, enhancing their confidence in integrating with stablecoins.
At the same time, emerging countries will continue to adopt stablecoins for cross-border transactions and USD exposure management. At the same time, more countries are starting to tokenize their currencies, which will naturally form a 24/7 foreign exchange market compatible with DeFi.
For more ambitious enterprises, on-chain stablecoin liquidity provides support for implementing real-world asset (RWA) strategies (such as circular investment), and retail users can also earn income by providing liquidity. In addition, the large-scale adoption of stablecoins will stimulate the demand for on-chain personal finance and promote the growth of yield-bearing products.
Projects like Cap, Perena, and Gauntlet are working hard to solve the fragmentation problem in the stablecoin ecosystem and provide users with more efficient and centralized solutions.
Today, stablecoins are no longer 'just another internet currency,' they have become a powerful proof of the combination of blockchain technology and the real world - achieving 24/7 instant settlement.
The transformative journey of stablecoins has begun.