Stablecoin Overtaking
The narrative of fully collateralized stablecoins has never been a rare thing in the crypto space. In 2023-2024, due to Tether's exceptionally high U.S. Treasury income, a batch of stablecoin projects were launched, all with glamorous backgrounds, compliance, strong backing, and top-notch teams. However, even strong contenders like PayPal's stablecoin have struggled to gain traction. Most projects have top-tier concepts, narratives, and funding, but once launched, no one buys them. After the passage of the Genesis Act, I believe more stablecoin projects with golden spoons will emerge, as every internet company wants to issue its own currency, but given the current trend, it is difficult to challenge Tether and Circle's positions.
Why is this the case?
Any currency's most crucial needs are usage (yield) scenarios and distribution channels. USDT, on one hand, came into the market early, and on the other hand, found demand from the black and gray markets under sufficiently decentralized circumstances, thereby expanding its business coverage; Circle, on the other hand, has firmly grasped compliance and continuously incentivized usage scenarios with real money. The problem with PayPal USD is that it has not found good yield scenarios in SOL (expected to provide treasury rates by summer 2025) and has not been fully integrated into PayPal's system, making it unable to incentivize actual distribution channels or TVL. From the perspective of usage scenarios in the crypto space, if this type of stablecoin is inserted into the existing DeFi puzzle, it cannot challenge USDT and USDC in terms of ecological niche because all the gaps are filled.
So where is the opportunity for overtaking?
I believe it lies in the deep binding with public chains. The ones with the most money in the crypto space are public chains, and they are also the ones most eager for transaction transfers (they can collect taxes), making them potential backers for these stablecoins. The likelihood of Solana's official providing incentives for PayPal USD is low, but the possibility of other chains offering some coins to initiate mining activities is relatively high, which would resolve the usage (yield) scenario. As for distribution channels, this is a problem that this combination solves together; ideally, the chain itself should have a strong enough background to bring along some channels and traffic. Additionally, the stablecoin issuer's channels can help find customers in real-world payments and cross-border transfers.
From this perspective, there are not many public chains that meet this standard. First, they need to have a strong enough background and be willing to spend money; they also need to have a strong linkage with large companies' compliant stablecoin projects:
1. Kaia, a product of the merger of national-level apps Kakao and Line in the crypto space, carries the last hope of the Korean public chain and is preparing to issue its own stablecoin soon. Given the popularity of Crypto in the East Asian world, it can help promote the narrative of Korean won stablecoin payments. Additionally, with a relatively complete DeFi infrastructure on Kaia, employing a money-splashing strategy to acquire users can lead to faster stablecoin adoption, resulting in a spiral rise for both the stablecoin and the public chain, eventually impacting stocks.
2. Aptos, situated within the Meta ecosystem, is all in on the U.S. compared to Sui's focus on the Middle East. As a high-performance public chain, if the Meta ecosystem chooses to issue a stablecoin, Aptos will definitely be among the options. Moreover, Aptos has been incentivizing mining activities on the chain recently, showing a strong commitment to pushing this initiative.
As more stablecoins emerge in the future, some will choose to issue on ETH and SOL, taking the traditional DeFi route. However, I believe there will be stablecoin projects that choose to collaborate with medium-sized public chains, where the public chain provides TVL incentives for stablecoins, and stablecoins provide the necessary transactions and asset accumulation for the public chain, ultimately achieving a win-win situation.
