➡️First, let’s talk about the recent movements in the stablecoin market.
1. The SEC recently stated that stablecoins backed by reserves and easily redeemable do not constitute securities. This means that as long as the issuing team meets these two requirements, they generally do not have to worry about being targeted by the SEC.
2. @worldlibertyfi launched the stablecoin $USD1, and its reserves are held by the world's largest independent qualified custodian, BitGo.
3. @circle recently launched an IPO with a valuation of 5 billion USD; although it is temporarily paused, it is expected to become a publicly traded company in the stablecoin sector, creating history.
4. In early April, the U.S. House of Representatives passed the STABLE Act, which stipulates reserve and capital requirements, including one-to-one reserve backing and anti-money laundering standards. This development provides policy benefits for compliant stablecoin companies like Circle and marks an increasingly clear regulatory framework for the digital dollar in the U.S.
5. Due to @justinsuntron's accusations against $FDUSD, it briefly unpegged to around 0.9. Recently, not only has this stablecoin unpegged, but also the Synthetix stablecoin sUSD has unpegged to around 0.9; however, due to its small market share, it hasn’t attracted enough attention in the market.
Going public, Trump-related projects issuing stablecoins, regulatory support, and the SEC's easing stance.
🙋Together we should make everyone aware of a few things:
1. Endorsement for the stablecoin sector: Even Trump is getting involved in stablecoins, how appealing must this sector be? If even stablecoins can go public, how good must this sector be?
2. Increased risks: In the entire stablecoin market of over 200 billion, how can new stablecoins find a gap and occupy a certain market share? Can Trump break into the market through political means? Or will he gradually establish a new growth path based on products and political influence?
3. Who can become the next big opportunity? Besides Circle and USD1, are there any new stablecoin projects that might achieve success and create a 'hero rising in chaos' story?
4. Is the stablecoin market unstable? The previous wave's $UST and this wave's changes; every market movement can severely impact the stablecoins held by everyone. Holding losses are not just about holding BTC and other cryptocurrencies; fundamentally, stablecoins are still cryptocurrencies.
It should be noted that algorithmic stablecoins like Synthetix's sUSD mentioned above (which uses SNX as collateral) do not qualify as compliant token projects. This is because the act requires issuers to hold at least 1:1 reserve assets, including dollars, demand deposits, short-term government bonds, repurchase agreements, and money market fund securities, and does not support cryptocurrencies as collateral.
💰Although the act requires that stablecoins cannot offer interest or yields, I want to emphasize where the opportunities lie for ordinary users: How can ordinary users discover yield opportunities in the stablecoin sector?
Continue to dig from the ancestors' graves:
There are many classifications of stablecoins in the market, categorized from various perspectives such as collateral mechanisms, issuance methods, etc.
Because this article mainly discusses compliance and the profit opportunities in the non-compliant stablecoin market, stablecoins are primarily divided into two categories:
1. Compliant non-yielding stablecoins: USDT, USDC, USD1, etc.
2. Yield-generating stablecoins: USDe, USD0, USDf, etc.
In other words, USD1 is optimistic about this compliant stablecoin sector and wants to capture a part of this blue ocean; why is that?
📊Let's start with the data: Currently, the entire stablecoin market is approximately 233 billion. According to estimates, achieving 400 billion in the short term and 1.4 trillion in the long term should not be a problem.
Currently, with a market share of 233 billion, USDT and USDC account for about 204 billion of that, which is 87.5% of the market share. In long-term development, this market share is expected to rise to 1.22 trillion; who wouldn't be tempted?
In the remaining yield-generating stablecoin market, which has a scale of about 12 billion, even if the market share remains the same, there will still be sixfold growth! Analysts such as Nikolaos Panigirtzoglou, Managing Director at JPMorgan, have analyzed that yield-generating stablecoins could potentially occupy up to 50% of the market share in the future.
Potential blue ocean market + gradually compliant market trends + possible short-term chaos in the stablecoin market: this contains the greatest opportunities for ordinary people: focus on yield-generating stablecoins, including stable APY/APR yield opportunities and the potential growth of non-stablecoin tokens. For example, ENA (USDe), USUAL (USD0), and @FalconStable's USDf, etc.
Here I will list the mainstream yield-generating stablecoin data comparison for your reference:
Note: For the aforementioned individual projects, their stablecoins and governance tokens do not necessarily have strong correlations! For example, ONDO. FALCON is currently uncertain since they have not yet issued a token.
🤔Some thoughts for the future.
1. As the two giants of stablecoins, USDT and USDC, if they face some pressure from the government, USDT will definitely be the first to suffer due to reasons such as lack of transparency in disclosures.
The absence of multiple audit reports and doubts about its reserve composition have subjected it to criticism.
There are risks involved: Will holding USDT lead to it becoming unpegged? Although USDT has historically escaped several instances of FUD, will it manage to this time?
There are also opportunities: its market share may be divided by USDC and other stablecoins.
2. In the future, under the condition of achieving compliance recognition: more interest groups, such as supporters of Musk and Trump, will compete to enter the stablecoin sector and share a piece of the pie, leading to a blooming situation in the stablecoin market.
3. A small detail: In the trading pairs of USDT and USDC on exchanges, the exchange rate of USDC has quietly increased a bit; I’m not sure why. But a reminder for those holding U during the recent market downturn: to avoid uncontrollable risks in the future, it may be more reliable to switch stablecoin positions mainly to USDC.
4. For ordinary users: grasping the spiral rise of yield-generating stablecoins is the most appealing, with token appreciation + APY yields, making it the most comfortable way to navigate through a bear market.
Of course, for those who haven’t issued tokens like Falcon, a little alert: because DWF may be the market maker for Trump’s WLFI and USD1 projects, and Falcon, heavily involved by DWF, could also be a strategic partner in the future (just imagining).
5. I suggest that those looking to enter the stablecoin sector should quickly register four-digit stablecoin names; I just checked, and names like USDX or XUSD are almost used up. 😂
6. Although USDC and USDT currently occupy most of the market share, under the support of the Trump administration, USD1 can gain substantial backing without needing to be overt.
Binance can leverage its good relationship with the Trump administration to assist in expanding application scenarios, such as trading pairs and Pool tokens.
And I also believe that USD1 will achieve a good market share success.
Risk: If Trump leaves office after this term, it may lead to complications for the projects he endorses. More long-term, even if re-elected, he may face 'reckoning' after a 10-year term, which is a risk point, though it's too far off to consider right now.
7. Excluding pure Web3 scenario demands, the wealth management needs of traditional large asset management funds, the payment necessities in regions/countries with unstable exchange rates, and the maturity of DeFi infrastructure combined with the trend towards compliance will fundamentally represent the stablecoin sector as the best calling card for large-scale adoption in Web3, pushed worldwide.
