Author: Poopman
Compilation: Deep Tide TechFlow
Stablecoins have recently become the focus of the industry, and related news is emerging one after another:
(Genius Act) Passed
Stripe Acquires Privy and Bridge
$crcl stock price increased 7 times from its IPO price
Plasma Quickly Completes $1 Billion Deposit Cap
Tether Becomes the 19th Largest Entity Investing in U.S. Treasury Bonds
Mastercard Partners with Chainlink to Allow Users to Purchase Stablecoins on Decentralized Exchanges
Banks, Big Tech Companies, and Asian Regions are Rushing to Launch Their Own Stablecoins
Regulatory issues that were once considered to be obstacles to the development of stablecoins are now becoming a driving force. Practitioners in the traditional financial (TradFi) field were hesitant about the stablecoin field in the past due to a lack of understanding, a lack of consensus, and a lack of compliance tools. However, as the stablecoin regulatory framework gradually becomes clear, the original resistance has become a catalyst.
According to Fireblock's data, regulatory frameworks have increased corporate confidence in stablecoins by 80%. At the same time, 86% of companies have established stablecoin infrastructure, indicating that banks and institutions have long been prepared for this transformation.
Why are stablecoins suddenly the focus of the industry?
The answer is simple: they solve real problems. The significant advantages of stablecoins include:
Instant and Low-Cost Cross-Border Transactions: Provide emerging markets with permissionless access to the U.S. dollar, while potentially leading to a more efficient on-chain foreign exchange market.
Driving Demand for Treasury Bonds: Stablecoins can increase demand for U.S. Treasury bonds, and the U.S. is happy to use this method to strengthen the U.S. dollar's dominance and sell its debt.
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 what is known as "mass adoption."
The Next Step for Stablecoins
As stablecoins are expected to grow 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 future of the stablecoin ecosystem may develop in the following four directions: payments, compliance, on-chain foreign exchange, and institutional yield expansion.
More than just trading: Stablecoins are moving into the mainstream market. From now on, their uses will go far beyond trading pairs, including payments, savings, and even new businesses that were previously limited by T+1 settlement delays.
Compliance tools: More mature and 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 indices) will emerge.
More than just trading
The original mission of stablecoins was 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 pair in mainstream exchanges due to their first-mover advantage. USDC followed closely behind, becoming 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. In the 2025 Cryptocurrency Adoption Index Report, it is shown that the growth of 8 of the 10 countries with the fastest growth in global crypto adoption is actually driven by peer-to-peer (P2P) transactions and remittance needs.
This growth is mainly concentrated in emerging markets, and the purpose of stablecoins is to provide these regions with permissionless access to the U.S. dollar - which is often difficult to achieve in low-income countries. For businesses in these regions, U.S. dollar-backed stablecoins provide the necessary protection to help them hedge against the sharp fluctuations in local currencies. As market confidence increases, I expect the adoption rate of stablecoins to further increase.
Trading View
Cross-border Payments and E-commerce with Stablecoins
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 the U.S. dollar. These features solve the slow and opaque problems of traditional cross-border transfer systems and release previously trapped capital for businesses.
A typical example is @ConduitPay, a cross-border payment solution supported by @dragonfly_xyz, which reported a surge in demand in import/export businesses in Latin America and Africa, which drove a 16-fold increase in platform transaction volume and helped them achieve an annualized payment amount of US$10 billion. This growth reflects the rapidly increasing demand for stablecoin solutions in the field of cross-border payments.
At the same time, the e-commerce field is also opening new doors for stablecoins, mainly due to their ability to increase the profits of merchants and payment processors. According to a16z crypto, retail giants like Walmart can reduce network fees and increase revenue by as much as 62% by adopting stablecoin payments. Payment processors like Stripe can also get higher profit margins from stablecoin payments, which may further incentivize them to integrate stablecoin payment functions.
Stablecoins are unlocking 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 ubiquitous. Here are a few typical examples:
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.
As regulatory barriers are gradually removed, stablecoins are actually ready to usher in explosive growth. In the future, we will see:
Cross-border stablecoin transfer volume in emerging markets has increased sharply;
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 field bring more sales.
This stablecoin revolution has only just begun.
Compliance tools
Trust is the key to enterprise adoption of stablecoins. As the GENIUS Act establishes a regulatory framework for U.S. stablecoin issuance, I expect the demand for compliance tools to grow as new issuers enter the market.
To understand the role of compliance tools in the stablecoin ecosystem, let's review some basics and background information.
Although state regulations may vary, there are two main regulatory frameworks shaping the future of stablecoins: MICA and GENIUS Act. Below is a table comparing the two frameworks (details are not discussed 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 summarized this concisely, and the following is the basic content:
Consumer protection
Reserve requirements: Must be fully backed by highly liquid assets (such as Treasury bills or cash with a term of no more than 93 days).
Information disclosure: The composition of reserves, redemption policies, and related fees must be disclosed publicly on the official website every month.
Restrictions: It is prohibited to use "USG" or any "legal" currency as marketing or promotional materials.
Bankruptcy protection: In the event of bankruptcy, stablecoin holders have priority claims.
No yield: Issuers may not provide yield or interest on stablecoins backed 1:1.
National security clauses
Bank Secrecy Act Compliance: Including anti-money laundering (AML), customer identification, transaction monitoring and record keeping, reporting any suspicious activities, etc.
Technical Execution Capabilities: Issuers must have the ability to freeze and destroy tokens, and be able to ban non-compliant foreign issuers from entering the U.S. market.
Sanctions Enforcement Coordination: The Secretary of the Treasury shall coordinate with stablecoin issuers to the greatest extent practicable before preventing foreign entities from transacting.
Enterprises must have the following capabilities to become "certified" stablecoin issuers: identify, freeze, track and publicly disclose reserves, and be able to effectively communicate with affected parties.
Compliance tool providers play a vital role in this process. For example, Chainalysis Sentinel can monitor 35 types of risky behavior transactions in real time. The platform provides an API that allows 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 become increasingly prominent. Some sanctioned entities have begun to turn to stablecoins as a medium for fund transfer when they cannot obtain U.S. dollars through traditional banking systems.
In addition, due to the stability of stablecoin prices, fraud and money laundering funds 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 robust compliance layer is essential for the stablecoin ecosystem. It helps identify, filter, and report suspicious transactions, providing businesses and new users with the confidence the system needs.
Chainanalysis Crime Report
The application of compliance tools is not limited to the existing infrastructure, but all platforms involving stablecoins need to gradually transform into compliance-friendly platforms.
For example, Coinbase recently acquired Liquifi Finance. Liquifi is a platform that handles token vesting, airdrops, and even payroll in the form of stablecoins. They are starting to offer tax reporting tools and ensure 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 functionality, including configurable compliance policies, integrated KYT (Know Your Transaction), AML (Anti-Money Laundering), and Travel Rule compliance capabilities. In addition, other industry players such as TRM Labs, Elliptic and Polyflow are also building compliance layers for stablecoins.
As stablecoins are used and popularized around the world, compliance tools will become the cornerstone of industry development. It can not only deal with the challenges of sanctions and illegal funds, but also provide a solid foundation of trust for the widespread adoption of stablecoins. The stablecoin compliance ecosystem is developing rapidly, and the future will be safer and more standardized.
On-chain foreign exchange market
As U.S. regulators approve the use of stablecoins, more countries are bound to follow suit, driving the digitization of stablecoins and their national currencies. This transformation will naturally give rise to the Onchain FX Market, which will bring two significant advantages: a 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 discuss the conversion between fiat currency and stablecoins (on/off ramp), because this topic needs to be analyzed separately according to the specific conditions of different countries.
At present, USD stablecoins dominate the market with a share of 99.79%, while EUR stablecoins (EURC) account for only 0.2%. Major non-U.S. dollar asset issuers include Circle, Paxos, and Tether. However, in the near future, compliant banks and institutions may also launch their own stablecoins, bringing more options to the market.
As demand changes, the market for non-U.S. dollar 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 the cost of converting fiat currency to stablecoins), Aerodrome's exchange cost 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 this year to 1,300. At the same time, new stablecoins such as the Canadian dollar (CAD) and the Brazilian real (BRZ) are also starting to enter the market. Although their market share is small at present, they have initially formed an influence.
As the global economy digitizes and stablecoins become compliant, the on-chain foreign exchange market is expected to become an important complement to traditional financial markets. It will not only provide 24/7 trading services, but also attract more retail users to participate, further promoting the digitization 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, achieving true globalization.
On-chain foreign exchange market
While stablecoin issuers (such as Tether, Circle, Paxos), banks, and fintech companies are promoting the popularity of stablecoins, some on-chain projects are also trying to integrate the "DeFi" element into the field of foreign exchange trading to promote innovation.
For example, Injective provides a 24/7 market and supports Euro (EUR) and British Pound (GBP) trading with up to 100x leverage; while MentoLabs uses CDP (Collateralized Debt Position) technology to allow 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.
Although the on-chain foreign exchange market has broad prospects, it still faces two major obstacles:
Insufficient on-chain liquidity: At present, on-chain liquidity is still relatively thin, with the largest single pool containing only about 1.3 million US dollars of EURC, which is obviously not healthy enough for large-scale transactions.
Friction in the conversion between fiat currency and stablecoins: The inefficient conversion between fiat currency (banking system) and stablecoins is still the main obstacle for the on-chain foreign exchange market to compete with the traditional foreign exchange system.
The era of high-yield stablecoins
Whether it is DeFi or personal finance, the stablecoin yield market is becoming the focus of the crypto field. In the future, anyone holding USDC may think about how to generate yield 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, the market capitalization of Yield Bearing Stable (YBS), such as Ethena and Sky, has increased 6 times to US$6 billion. At the same time, the demand for leveraged exposure and yield farming has become the main catalyst for the total lock-up volume (TVL) of lending agreements (such as Aave, Euler and Syrup) to reach a record high.
Looking back at DeFi Summer, we once enjoyed the high yields brought by the flywheel-style 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 collapse directly.
With the success of Ethena, the CeDeFi (Centralized and Decentralized Finance combination) model has gradually become popular. Depositors lend stablecoins to the team, who generate actual transaction yields through off-chain strategies. This model has opened up a prosperous era of YBS, and projects create yields by running on-chain and off-chain strategies. Although this method gets rid of the limitations of token prices as the only reason for using the protocol, it also reduces the value accumulation of the tokens themselves.
The most common yield-generating strategies on the market today come in three forms:
Short-term Treasury bills (T-bills)
Delta neutral strategy
Money Market Strategy
Although there are many other strategies, these are considered to be the proven "classic yield" methods in the market. Yield-bearing stablecoin strategies generate a total of about US$1.5 million in revenue per day, and this trend remains healthy.
RWA Strategy and Money Market
Yield Bearing Stables is just the tip of the iceberg.
In the next stage of the yield market, traditional finance (TradFi) RWA (real-world asset) 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 with it as collateral. Borrowers can then use the borrowed USDC to reinvest in ACRED, forming a leveraged cycle. In this setup, ACRED investors enjoy leveraged returns, while USDC providers (retail users or funds) earn interest paid by ACRED.
Here is a good 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 with them, the size of this market 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 unlimited.
This new source of yield 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 striving to maintain compliance while meeting institutional needs. However, legal guidance for these products is currently unclear, and legal and compliance risks remain a major obstacle.
Fragmentation
As the number of yield strategies and projects increases (there are 50+ projects and growing every day), the market becomes increasingly complex and fragmented.
New users often don't know where to deploy stablecoins to get the best yields, and they don't know how to allocate their portfolios based on risk adjustments. 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 such as @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 yields) with just "one click" and only pay 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 enables a high degree of 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, optimizing the user's yield experience.
However, the widespread adoption of stablecoins is inseparable from a trust mechanism. To this end, Cap Money has created a brand new market that allows asset holders (restakers) to delegate assets to strategy providers through EigenLayer to provide "trust" to stablecoin holders. In return, these asset holders receive a portion of the profits to compensate them for the trust they provide.
A very interesting idea to "safely" aggregate yields.
Perena
SOL is known for its fast and low-cost transactions, making it an ideal blockchain for everyday stable payments and on-chain foreign exchange markets.
Perena leverages the high-speed and low-cost advantages of the SOL blockchain to build a unified stablecoin liquidity layer - StableBank. By integrating the on-chain liquidity of branded stablecoins such as USDC, USDT, PYUSD, BENJI, and AUSD into an automated market maker (AMM) and representing it with the receipt token USD*, Perena provides the best exchange rate for stablecoin exchanges on the SOL chain.
In the upcoming Perena v2, they will add a smart routing function that scans all liquidity pools and over-the-counter (OTC) platforms to ensure users get the best exchange rate (even for non-SOL chains). In addition, Perena will also support multiple currencies (such as EURC, GBP, etc.) and cross-chain exchange functions, making it ready for the large-scale adoption of stablecoins.
But USD is not only an exchange engine, it is also a platform that integrates savings and yields. Through cooperation with more than 20 projects, Perena's StableBank network provides USD holders with the best yields and strategies, connecting strategies that need public attention with stablecoin farming users seeking yields through one interface.
Stablecoin network
Gauntlet USD Alpha
Gauntlet USD Alpha ($gtUSDa) is a new product launched by the Gauntlet team that implements off-chain strategies on the blockchain through the vault infrastructure developed by Aera Finance. This vault is managed by the "Guardian" (designated executor) and is designed to help users achieve on-chain yield goals.
Gauntlet USD Alpha's core goal is to dynamically allocate depositors' stablecoins to the highest-yielding lending markets and automatically adjust positions based on 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 yields 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 mainstreaming process of stablecoins is accelerating. For example, the Genius Act has provided a clear compliance framework for traditional finance (TradFi), fintech (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 U.S. dollar 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 companies, on-chain stablecoin liquidity provides support for implementing real-world asset (RWA) strategies (such as circular investment), and retail users can also earn yield 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 to address the fragmentation in the stablecoin ecosystem, providing 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.