The global demand for dollars has not decreased but has exploded. While headlines focus on 'de-dollarization,' a more significant trend is emerging: over 4 billion people and millions of businesses are actively seeking dollars through stablecoins, representing the largest expansion of the dollar network effect in decades.
This has created unprecedented opportunities for Ethereum. Stablecoins provide individuals globally with access to dollars—growing 60-fold since 2020, exceeding $200 billion—millions of new dollar holders need more than just digital cash. They need yields, investment opportunities, and financial services. Traditional finance cannot serve this vast new market due to regulatory and infrastructure limitations.
Ethereum has a unique advantage in providing global financial infrastructure for this new digital dollar economy, and ETH will directly benefit from this growth.
1. Millions of new dollar holders are entering the dollar market through stablecoins.
There is enormous potential demand for dollars from individuals and businesses globally.
People around the world want to use dollars to ensure security:
Over 4 billion people face massive currency risks due to political instability, poor monetary policies, and structural inflation.
It is estimated that 21% of the global population lives in countries with an annual inflation rate exceeding 6%, quickly eroding savings and purchasing power.
For these groups, holding dollars means financial security. The dollar is seen as a store of value, a means of cross-border transactions, and a hedge against local currency fluctuations.
Businesses need dollars for transactions:
The dollar remains the dominant currency in global trade, with 88% of foreign exchange transactions involving the dollar on at least one side.
Companies in emerging markets rely on dollar liquidity for international payments, imports, and supply chains, while local banks and foreign exchange markets in these markets are often limited or unstable.
Small and medium-sized enterprises and freelancers increasingly need digital dollars to get paid and avoid currency mismatch risks.
For the first time in history, anyone in the world can hold dollars through stablecoins:
Anyone with internet access can hold and trade dollars—no bank, no government permission, available globally around the clock.
Thus, since 2020, the market cap of stablecoins has grown 60-fold.
Major adoption is concentrated in emerging markets that were previously excluded from dollar-denominated finance. Nigeria has become the world's second-largest cryptocurrency market, while China remains under a ban, with underground cryptocurrency applications continuing.
Stablecoins are creating a new group of dollar holders among the world's largest population groups—businesses price in USDT, families save in USDC. They are driving a fundamental expansion of the dollar financial services market.
2. These new dollar holders seek yields, creating opportunities for new global financial infrastructure.
Stablecoin holders want their money to work for them.
Today, millions can hold dollars through stablecoins. But their aspirations go far beyond that. Individuals and businesses naturally want to use funds to earn returns, invest, and grow wealth.
Traditional finance cannot serve this new market:
The U.S. banking system requires regulatory compliance, excluding most global participants.
Cross-border financial services remain expensive, slow, and geographically restricted.
Traditional finance is built for institutions and high-net-worth individuals, not global retail.
Geographic and regulatory barriers hinder billions from participating in dollar-denominated financing.
This creates a demand for new financial infrastructure that can serve billions of global stablecoin holders, enabling them to put new dollars to work.
3. Only Ethereum can meet all three requirements to serve global stablecoin holders.
New financial infrastructure serving stablecoin holders must meet three key requirements simultaneously:
Globally accessible— It must be applicable everywhere with internet access, from New York to Nigeria, and to rural areas of Nepal. Due to geographic or regulatory reasons, most regions of the world cannot access dollar-based financing.
Safe for institutions— It must provide the security, reliability, regulatory clarity, and customizability needed for institutions to build financial products worth billions of dollars.
Resistant to government intervention—It must not be controlled by any single government, as many governments prefer to restrict the circulation of dollars to protect local currencies and control capital flows.
Ethereum meets all three requirements:
Globally accessible: Anyone with an internet connection can use Ethereum around the clock.
Safe for institutions:
Secure—Among all programmable blockchains, it has the highest economic security and decentralization. It has the most mature security infrastructure, with the most open-source developers, verified contracts, security audit developers, and tools.
Reliable—It has maintained 100% uptime for 10 years, regardless of market crashes or geopolitical events.
Regulatory compliant—U.S. regulators classify ETH as a commodity, providing a clear institutional framework.
Customizable—Ethereum's L1+L2 framework achieves customizability, allowing institutions to optimize for specific use cases and meet regulatory requirements (for example, Coinbase and Robinhood have built L2 chains on Ethereum).
Outstanding track record—It has the world's largest digital financial economy: stablecoins with a market cap exceeding $140 billion, over $60 billion invested in decentralized finance (DeFi) protocols, and more than $7 billion in tokenized real-world assets.
Resistant to government intervention: Governments cannot seize a single point of control to control or restrict the network.
Ethereum uniquely meets these requirements with its strong decentralization characteristics—its origin story is nearly impossible to replicate today.
Strong decentralization makes Ethereum globally accessible, secure, reliable, and resistant to government intervention.
This level of decentralization is rooted in Ethereum's origins and culture.
Ethereum was initially a community-funded blockchain that adopted a proof-of-work mechanism, resulting in a very broad ownership of its assets. However, today's environment no longer makes it suitable to launch in this way.
Its culture has always prioritized decentralization—maintaining an expensive diversity of clients and resisting shortcuts to centralization—making this culture nearly impossible to transform.
As a result, Ethereum has a decentralization advantage that other public chains cannot easily replicate, providing Ethereum with a lasting moat.
Over a million validators across over 100 countries.
Multiple independent development teams ensure resilience and the largest open-source developer ecosystem.
Due to community-funded launches and proof-of-work origins, asset ownership is widely distributed.
No other alternative can meet all three requirements simultaneously:
* Bitcoin may become more programmable in the future, but only if the Bitcoin community agrees to change the opcode to enable this.
4. As ETH becomes the reserve asset of the new digital dollar economy, its demand may increase.
What is a reserve asset?
In any financial system, reserve assets are the trustworthy foundational layer that supports everything. They serve as collateral, savings, or liquidity assets held by institutions, protocols, and users for value storage, loan guarantees, and transaction settlements.
In traditional systems, the dollar, U.S. Treasury bonds, and gold are examples of reserve assets because they are trustworthy, highly liquid, and widely accepted.
Why ETH naturally plays this role.
As billions of dollars flow through stablecoins on Ethereum, participants need a secure, permissionless, and efficient asset to support lending, staking, and yield generation. ETH has a unique advantage in this regard because:
Scarce and trustworthy: The supply of ETH is predictable, with low inflation rates and no central control.
Yield-generating: Unlike gold or static dollars, ETH generates returns through staking—similar to income generated from holding real estate or government bonds.
Collateral utility: ETH is already the largest on-chain collateral asset in the Ethereum ecosystem, supporting lending protocols worth $19 billion. Institutions hold it because they need it to enter the DeFi market.
Censorship-resistant and anti-seizure: ETH cannot be frozen or seized by governments, making it more resilient than centrally issued assets.
Programmable and highly liquid: ETH is deeply integrated into the entire on-chain financial system, offering unparalleled liquidity for large transactions.
Why this makes ETH valuable.
As more users hold stablecoins and need financial services, they need a reserve asset to support these activities. ETH can earn yields, secure the network, and support DeFi lending—thus, as the system evolves, the demand for ETH will naturally grow.
In simple terms: more adoption of stablecoins → more on-chain activity → more demand for ETH as collateral → institutions and users hold more ETH.
L2s expand demand for ETH.
The growth of Ethereum Layer-2 further stimulates demand for ETH. By reducing transaction costs, speeding up transaction speeds, and enabling new use cases, Layer-2 opens up more fields for ETH to be used as collateral. This expands the reach of ETH and strengthens its position as a reserve asset in the digital dollar economy.
5. As demand for ETH increases, it is also expected to become a global store of value.
The growing demand for ETH has also captured a significant share of the traditional store of value market.
Like Bitcoin, Ethereum has superior store of value (SoV) characteristics compared to traditional assets like gold.
ETH and BTC will not compete with each other but may share a slice of the $500 trillion traditional SoV asset market (gold, government bonds, stocks, real estate) in the coming years.
In addition to possessing Bitcoin's SoV attributes, ETH also offers yields to holders.
Yield generation is a significant advantage, as investors generally favor income-generating assets. American households hold about $32 trillion in dividend stocks, while their holdings in gold are less than $1 trillion.
ETH has characteristics that outperform traditional store of value (SoV) assets and can provide yields:
6. Conclusion: Holding ETH may be the best way to participate in the growing stablecoin economy.
The growth of the stablecoin economy has established a powerful flywheel for Ethereum and ETH.
As more stablecoins are put to use on Ethereum, the demand for ETH also increases. Higher ETH value and a more secure network attract more institutions and services, further driving the adoption of stablecoins.
Alternatives face significant challenges in replicating this flywheel:
Traditional finance cannot serve billions who have been excluded due to geographic and regulatory barriers.
Government-controlled systems remain subject to political influences and jurisdictional limitations.
Bitcoin lacks the programmability required for complex financial services.
Other blockchains lack the security, reliability, and customizability required by institutions and lack the decentralization to resist government intervention.
The result is: holding ETH may be the simplest and most effective way to access the growing stablecoin economy.
You can also choose to invest in specific DeFi protocols that benefit from the expansion of stablecoins. However, this carries higher risks and requires expertise.
For most retail and institutional participants, ETH provides the simplest access to the entire digital dollar ecosystem.
Appendix
Notable risks
Like any emerging global system, Ethereum faces significant risks. Despite many risks, the three biggest risks pose the greatest threat to the argument that 'Ethereum will use ETH as a reserve asset to build a permissionless, dollar-based financial system.'
1. Dollars become the reserve asset instead of ETH.
If stablecoins like USDC or USDT dominate and are used for lending, collateralization, and settlement, the dollar could replace ETH as the reserve asset of the system. In this case, ETH might be seen primarily as 'gas money,' rather than a core store of value. However, given that ETH constitutes 44% of on-chain lending collateral on Ethereum's mainnet and Layer 2, generating 3-5% staking yields, replacing ETH seems quite challenging. More importantly, ETH is the only truly decentralized asset on Ethereum—stablecoins like USDC and USDT are centralized and can be frozen or seized, fundamentally preventing them from fulfilling ETH's role as a censorship-resistant collateral. More likely, ETH and the dollar will play complementary roles—the dollar committed to stability and transaction optimization, while ETH provides decentralized, censorship-resistant value storage and network ownership.
2. Competition from CBDCs, which may replace the adoption of dollar stablecoins.
Central Bank Digital Currencies (CBDCs) can provide similar 24/7 access to digital dollars and have complete sovereign backing, which may crowd out private stablecoins and limit the permissionless dollar system currently supported by Ethereum. CBDCs are inherently national and often lack true cross-border interoperability, and may restrict open developer access due to compliance and identity requirements. In contrast, stablecoins have completed trillions of dollars in settlements annually, operating globally by default, and maintaining greater flexibility in innovation, making it difficult for CBDCs to replace them.
3. Competing chains surpass Ethereum.
A blockchain that is faster, cheaper, and less decentralized at the outset may attract users and developers focused on low fees and a streamlined user experience, creating strong liquidity and network effects early on. Over time, this chain may mature its validator set sufficiently to reach a 'sufficiently decentralized' level, thereby undermining Ethereum's dominance. However, given Ethereum's level of decentralization and its decade-plus proven security, replacing it is no easy task.
Additional data
Annual stablecoin settlement volumes exceed $6 trillion (a tenfold increase since 2020):
Ethereum holds over 55% of stablecoins:
ETH may become the reserve asset of the new financial system. 44% of the collateral in the Ethereum ecosystem is ETH, making it the largest collateral asset ($19 billion):
