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Author: Paolo@Shengli Securities Partner, Senior Researcher at Andy@VDX; Source: VWin Ventures
TLDR:Stablecoins are the value mapping of its underlying fiat currency on the blockchain, and are the trading medium that links fiat currency and crypto assets.
The core scenarios of stablecoins are divided into transactions and payments, which are used to perform permissionless transaction settlement for financial assets and commodity trade on the global flat blockchain clearing and settlement network.
Trading scenario: The head is concentrated, and the future increase comes from new financial assets on the chain. The stablecoin competition pattern gradually evolves from the on-chain/exchange trading scenario competition to the on-chain market competition of traditional financial transactions.
Payment scenario: Payment is the largest incremental market for stablecoins at present, especially cross-border remittances and local acceptances. There is a real and huge demand. Stablecoins are eroding the core interest chain of the traditional clearing system represented by SWIFT and card organizations. Licensed financial institutions provide customers with compliant and stable trading venues.
The leading stablecoin players USDT and USDC have begun to rely on early channels and traffic binding, and compete in later competition for liquidity and ecological networks. Tether relied on the natural expansion of distributed networks of black and gray industries in the early days, and Circle relied on compliant identity to expand mainstream financial channels.
The US dollar stablecoin essentially carries the new round of "degeochemical" output of the US dollar's financial sovereignty, establishes a US dollar network that can be circulated globally without traditional banks and central banks, promoting free circulation on the capital side and concentrating the head of the asset side. The United States can remotely control the flow of US dollar on the global chain through regulatory and KYC reviews, forming a new digital colonization model.
The underlying logic of stablecoins – The shadow dollar on the global fresh clearance settlement network
Stablecoins initially solved the problem of value stability in the digital asset world, but essentially, they met the global demand for "debanked dollars". This digital dollar can flow freely for 7*24 hours without restrictions on the bank and central bank systems, quickly occupying the "gray zone" that banks cannot reach.
The United States has acquiesced to private institutions to issue stablecoins, extending the US dollar to areas that are difficult to cover in traditional regulation, forming a decentralized but essentiallyA controllable "dollar digital colonization system".
Stablecoins are a business that monetizes liquidity by credit. Making a stablecoin means becoming a private "global central bank", with extremely low storage absorption costs and marginal expansion costs, and mastering two-way redemption fees, fund precipitation and interest generation, and some underwater multiple profit models. In the entire Crypto industry, stablecoins can be called "casino chips" and "mine shovels", serving "gray" needs such as speculative arbitrage and leveraged trading; stablecoins are one of the very few core businesses in the Crypto industry that have real long-term value.
Core scenarios of stablecoins – permissionless transaction settlement of financial assets and commodity trade
The current total issuance scale of stablecoins exceeds 200 billion US dollars, which is mainly divided into two core scenarios: transaction vs payment.
Scenario 1: Trading market (stock dominant, flywheel effect strong)Trading scenario, stablecoins, as a safe-haven asset and trading medium, have become more concentrated in the top spot. USDT/USDC has a deep moat and has obvious network effect:
Stock market: At this stage, the lack of high-quality assets on the chain further attracts liquidity, the growth of stablecoins in trading scenarios is hindered, and competition is fierce;
Incremental direction: The future growth point lies in the RWA (real world assets) being launched, gradually developing from standard products (such as bonds) to non-standard equity assets, forming new opportunities similar to "on-chain Nasdaq";
New player opportunities: Grasp new assets and new scenarios- Taking FDUSD binding to Binance Exchange as an example, relying on specific vertical scenarios to build network barriers; or Ethena and Usual develop on-chain fixed-income wealth management products similar to Yu'ebao to seize the scenario-based entrance to users' financial needs.
The future development of trading scenarios will gradually shift from simple trading tools to asset financialization and securities chain upwardization. Players compete with resource integration and scene barrier construction.
Scenario 2: Payment market (current largest incremental source of stablecoins)Compared with transaction scenarios, stablecoins in the payment field have greater potential, and come from the stock conversion of the traditional payment market:
Cross-border payment demand: especially developers,The unified financial system is weak, the cost advantage of stable currency is obvious, and the demand is huge. The stable currency has seriously impacted the monopoly position of the traditional banking system.
Core competitive elements in payment scenarios: In the stablecoin payment scenario, credit endorsement and liquidity support are the foundation, and the core of competition lies in the construction of channel networks. Although the business model is relatively homogeneous, in the early blue ocean market, by extending upstream and downstream, it can still seize dividends on the asset side or traffic side to form a bilateral network effect.
Path strategy:
Top down: Circle has obtained a global compliance license, and uses its official credit and first-mover advantages to promote traditional financial institutions to accept USDC;
From bottom up: represented by USDT, it grows wildly through local non-compliant financial institutions and OTC channels, quickly occupying market share, but there are long-term compliance risks.
Compared with stablecoin issuers (Issuers), channel distributors (such as payment companies, brokers, etc.) can also obtain market expansion and customer acquisition benefits, focus on downstream channel construction, build regional distribution networks, capture incremental market dividends, and have rich gross profits in the early stage, but market barriers are weaker than the network effect of issuers.
The development path of leading stablecoins – The starting point depends on traffic, and the success or failure of the supply chain
The core elements of stablecoin competition are: 1. Credit endorsement; 2. Liquidity support; 3. Channels and customer acquisition capabilities. The competitive landscape of top stablecoins has evolved from the competition of on-chain/exchange trading scenarios to the competition for markets and channels in non-encrypted scenarios such as cross-border payment settlement. Tether (USDT issuer, issuance volume exceeds US$140 billion, market share exceeds 60%): The development path is similar to the three stages of US dollar development. Tron, which cooperates with censorship-resistant Tron, relies on the natural expansion of the distributed network of black and gray products, has formed a strong network effect.
Circle (USDC issuer, issuance volume exceeds US$60 billion, market share exceeds 25%):
Early binding exchanges and public chain cold starts (Coinbase & Base, Solana, Binance Launchpool)
Global acquisition of compliance licenses has formed a barrier, and the competitors have withdrawn (BUSD was sanctioned by the United States and MiCA cleared USDT in Europe), becoming the largest trusted compliance stablecoin in the capital market
Using compliance endorsement to continuously expand compliance financial channels (exchanges, payment companies, banks), and grasp global incremental scenarios (new asset transactions such as payments and RWA)
Circle officially submitted an IPO application document to the US SEC in April 2025, and is expected to become the first stablecoin target in the US stock market; the main growth scenarios of stablecoins in the future come from cross-border trade and global cross-border payment chain, and the compliance market is a larger source of incremental growth. USDC, as the compliance leader, is favored by mainstream US institutions and is expected to seize major market share. Circle is expected to achieve significant fundamental growth in the long run.
Future Challenges
Future Challenges
Can Tether be "recruited" by compliance? To some extent, Tether helped the US dollar expand and became the top 20 US bond investment institution in the world. It also has a deep relationship with the former asset management company of Commerce Secretary Lutnick.
The interest rate cut cycle has begun, and issuers' interest income has declined. How to improve diversified profitability?
In the context of Deregulation, more and more traditional financial giants (banks, payment companies, etc.) have entered the compliance track competition. How many bonus periods will Circle have to lead the compliance position?
Payment scenarios have become the main battlefield for stablecoins in the future competition. Cross-border payment chain has huge growth space
The global stablecoin transaction volume in 2024 has reached US$15.6 trillion, surpassing the scale of traditional payment giants Visa and Mastercard during the same period, becoming one of the most important value transmission networks in the world. Conservatively estimated that more than half of the volume comes from cross-border payment scenarios.
The traditional payment scenario has long processes and involves many intermediate links. Stablecoin has obvious advantages in cross-border payment. Stablecoin payment has two main core business scenarios: Scenario 1: To B business
To B is more like a web2.5 business, adding a "fiat currency-stablecoin" process (also the main source of profit) to the original payment chain. Compared with the compliance system, it achieves cost reduction and efficiency improvement, and realizes regulatory arbitrage in areas with difficulties in exchange rates or sanctions, and solves real needs.
To B has a large business scale, stable cash flow, real business scenarios, including virtual service customers (e.g. language chat, online spinach, etc.) and traditional goods and trade customers:
Most virtual service customers have stablecoins one-way off ramp demands, such as Crypto on the income side, and fiat currency on the expense side (investment, wage payment, etc.) are legal currency. This scenario is serious and gradually saturated, and it emphasizes operation and sales capabilities.
The demands of traditional goods and trade customers generally involve the entire process of cross-border payment: local collection - local acceptance - cross-border transfer - foreign exchange - payment, and some also include foreign exchange settlement, tax refund and other needs. In the long-tail small There is higher gross profit, competing for stable capital flow channels, channel network construction, and local operation capabilities. In comparison, the chain is longer, and more inefficient links in the traditional payment chain have been replaced and integrated, and there is higher room for value chain optimization and profit improvement.
To B business has compliance pressure when it reaches a certain level of magnitude. Hong Kong MSO/Singapore MPI and other licenses have become necessary compliance costs after scale.
Scenario 2: To C businessTo The typical business format of C business is U card issuers, which mainly serves end customers whose underbank is not fully served by banks. The overall business currently has a low gross profit margin. The business link is:
C-end customer - secondary card issuer [acceptance of third-party acceptance] - primary card issuer (such as commercial banks, payment companies, etc.) - card organization (Visa, Mastercard)
Because the high threshold for expanding upstream to first-level card issuers, simple crypto cards are a business with higher risks than returns, but they can be used as a means of customer acquisition. By absorbing deposits and expanding asset management and other businesses, it has also become a natural choice for the expansion of major exchanges.
Whether it is B-end or C-end users conducting exchanges, compliance and security have always been the biggest pain points in the market. As the market advances to institutionalization and mainstreaming, licensed financial institutions have become the most compliant and secure trading channels, such as Hong Kong Compliance Exchange, listed broker Shengli Securities, etc., providing customers with safe and reliable trading options.
Future development trends of stablecoins: Compliance disputes
The current compliance development path of the stablecoin market is difficult because the traditional financial system has large conflicts of interest and high compliance thresholds. But in the long run, the compliance route is more strategic: under the background of geopolitical conflicts and financial sanctions, trade companies need compliance, security, audit-recognized, and consistent interests;
Mainstream institutions have entered the market one after another (Fidelity, Wyoming State, World Liberty Finance, etc.), seize the transformation of traditional existing payment market + high-quality assets on the chain;
Local protection and local leading players appear, such as the emergence of compliant stablecoins in Europe and Hong Kong. New players include local banks, payment companies, Internet companies, etc., licenses are the stepping stone, and the core of competition is to seize and build core channel resources and exchange networks;
Under the trend of de-dollarization of international trade, such as in the Belt and Road trade scenario, the opportunity to implement offshore RMB
Strategic competition: Stablecoins help the US dollar achieve financial hegemony output?
From a higher global strategic competition dimension, the US dollar stablecoin carries the "degeochemical" output of the US dollar's new round of financial sovereignty. The stablecoin maps the US dollar to the blockchain, a global permissionless clearing network, to help capital and liquidity achieve smoother circulation around the world on the capital side, and intensify the "globalization Matthew effect" and head concentration on the asset side.
Stablecoins have greatly reduced obstacles to the global liquidity of the US dollar, bypassing the banking and central banking systems to directly target global users. In the past, the dollar hegemony relied on the central bank for trade settlement. Currently, in many markets, especially developers, people spontaneously used stablecoins as a means of denomination payment and storage. Stablecoins have achieved free circulation of the US dollar across national borders, which is convenient for attracting global funds to US dollar assets such as US bonds and US stocks, and at the same time is conducive to the US's asset harvest through US dollar tides.
Development central banks are therefore in a passive position. The dollar hegemony continues to extend through stablecoins in compliance and gray legs:
Grey expansion: USDT is typical, backed by regulatory arbitrage demand, and is widely used in gray scenarios such as speculation, betting, and avoiding financial supervision. It is widely used in foreign exchange controlled areas such as Southeast Asia, Latin America, and Africa, and rapidly expanding user base and market penetration.
Compliance expansion: represented by USDC, supported by US regulatory support, mainstream financial institutions are gradually included, and building an on-chain compliant USD clearing and settlement network is of great long-term value, but due to certain conflicts of interest with the traditional payment system, the current growth is relatively slow, and the development path is more dependent on official supervision and institutional endorsement.
The US regulatory strategy is reflected in acquiesce to the wild growth of the gray field (USDT), and actively supports the development of compliance scenarios (USDC). The two jointly build a strategic moat of the US dollar on the chain, realizing the siphon effect on global financial liquidity.
As a strategic projection tool for the US dollar, stablecoins are essentially a "programmable financial sanctions" weapon, and the United States controls the seemingly decentralized network clearing network. The United States can accurately attack targets through regulatory compliance and smart contract freezing assets (such as USDC freezing Tornado Cash-related addresses).
For developers or makers in other regions, how to avoid becoming a "digital dollar colony":
If a credible local on-chain financial system is not possible, it will become a passive user of the US dollar stablecoin system for a long time.
The "clearing is hegemony" in the new era: controlling the liquidation flow on the chain is like controlling the global water source - it seems free, but in fact it has valves. Consider introducing domestic or regional on-chain financial infrastructure (such as local stablecoins, CBDCs) to reduce the amount of on-chain to the US dollar.over-dependence of the department.
Conclusion: Stablecoins, a strategic weapon of US dollar hegemony in the new era and a historical opportunity for the reshaping of the global financial order. The implementation and popularization of stablecoins rely on real transaction needs and clearing efficiency to build a structural and sustainable capital flow network around the world.
The current stablecoins have been relatively stable in the crypto trading scenario, with leading players monopolizing the market share, and the increment comes from the new financial assets being put on the chain; and the payment scenario, especially cross-border payments, is the current main incremental blue ocean and structural breakthrough.
The on-chain payment and clearance network built around stablecoins is eroding the cross-border payment system dominated by traditional banks and SWIFT, giving birth to a huge payment and exchange market with trillions of dollars, providing a historic opportunity to redefine its role for global financial institutions, payment companies and even financial infrastructure.
The rise and widespread popularity of stablecoins essentially continues the penetration of US dollar hegemony in the financial system, but only upgrades it to a more hidden, broader, more strategic and precise on-chain version. The competition in the stablecoin era is no longer a game at the financial instrument level, but a strategic competition between global monetary sovereignty and the discourse power of global financial order.
