Ok, so here we are: the first one.

What to write about? What’s my style? What level of detail should I go into? Is anyone even going to read this?

Well, I guess we’ll find out - let’s jump in.

Table of Contents

• Market overview

• Interesting news

• What is a stablecoin?

• What are relevant stablecoin use-cases?

I plan to start every new post with

• some relevant data and KPIs and want to keep track of for you.

• a brief and incomplete overview with some stuff I found relevant and interesting over the past weeks and

The format for that will likely change over time, but to start off here is the very first iteration.

Market overview

The total market capitalisation of the stablecoin market (so the value of all individual coins of all stablecoin projects combined) is with ~220bn USD hovering around its all-time high. This year alone, it has added another 20%. Why is nobody talking about this?

This is likely due to one of the current main use cases of stablecoins (people exchanging their non-stable crypto assets to stablecoins in between trades or to take profit, but more on that later).

The overall crypto market has seen a few all-time highs since the US election last November, leading to a lot of value being created through those gains. That, and the many economical and geo-political insecurities have led to investors both retail and institutional taking profits and / or taking out risk and consequently exchanging their non-stable crypto assets to stablecoins.

Tether’s USDT remains by far the most relevant stablecoin by market cap. The stablecoin market is unquestionably dominated by USD referenced assets - there is not a single non-USD referenced asset in the top 10 stablecoins. Based on coinmarketcap.com data, Stasis Euro (EURS) is the currently the biggest non-USD referenced asset with less then a thousandths (!) of the market cap of USDT.

It will be very interesting to see, how this chart might change within the next months with the new regulatory framework called markets in crypto assets (“MiCA”) forcing centralized exchanges like Coinbase or Binance to delist stablecoins, which are not in full compliance with MiCA. Since USDT is not MiCA compliant, some big players have already announced plans of delisting relevant trading pairs at least for European users. I am curious to see if / how it actually impacts big assets like USDT.

Currently the stablecoin market cap equals 1.05% of the M2 money supply (basically cash, and everything quickly convertible to cash). The transferred volume (stablecoins moved across all blockchains) is down over 30%, signalling a decline of on- and off-ramping through stablecoins after the craze in the beginning of the year around the inauguration and meme-coin mania. Monthly active addresses and holders are both slightly up.

Ethereum is the heavy weight when it comes to hosting stablecoin ecosystems. While the biggest stablecoins like USDT operate on multiple L1-chains (e.g. USDT is available on 9 different ones like Ethereum, TRON, Solana, Arbitrum, etc.), Ethereum still leads with bundling more than 50% of the total market cap on their chain. It was surprising to me to see, that TRON is “only” 50% behind Ethereum and Solana then follows with only a sixth of TRONs volume.

Interesting news

• Bank of America (second largest bank in the US) CEO in an interview teases the option of them releasing their own - fully dollar backed - stablecoin, if the regulatory framework is set.

• After their record acquisition of the stablecoin startup bridge, we already knew Stripe was bullish on stablecoins - they have now in a yearly letter underlined their ambition and outlined their vision for innovative stablecoin use cases. I will cover some use-cases for stablecoins later in this post.

• The world’s largest crypto exchange Binance to delist 9 stablecoins including USDT for Europe in MiCA win for Circle’s USDC, while Coinbase so far only talks about it

Wow, that was longer than expected. Will probably try to keep this shorter and optimise for a quick read of this section in the future.

What is a stablecoin?

As the name suggests, a stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as a fiat currency (e.g., USD, EUR), commodities (e.g., gold), or other financial instruments. Unlike volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins aim to provide price stability, making them more suitable for everyday transactions, savings, and use in financial markets. They run on blockchain technology, which (theoretically) allows for fast, transparent, and borderless transactions while reducing reliance on traditional financial intermediaries.

If I were to ELI5 this, I’d say something like this: a stablecoin is digital money that stays stable by being tied to real assets like dollars or gold. Unlike Bitcoin, it doesn’t wildly change in price. It runs on blockchain, making transactions (theoretically) fast, transparent, and global—without banks (yeah yeah, I know. a real 5-year old would have a ton of follow-up questions, but you get my point).

There are different types of stablecoins based on how they maintain their stability, the main ones in my opinion being:

• Fiat-backed – Backed 1:1 by traditional currency held in reserve, typically held by a central entity (e.g., USDT, USDC). These are the most widely used and simplest stablecoins but rely on trust in the issuer.

• Crypto-backed – Collateralized by other cryptocurrencies, often requiring overcollateralization to absorb market volatility (e.g., DAI). These are more decentralized but can be capital-inefficient.

• Algorithmic – Maintain stability through supply adjustments and economic incentives, without direct collateral (e.g., the now-defunct TerraUSD). These are highly experimental and have shown significant risks.

There are also some hybrid concepts, combining elements of the above models to improve capital efficiency, decentralization, and stability. For example:

• Fractional-algorithmic stablecoins (e.g., Frax), which are partially collateralized and rely on algorithmic mechanisms to balance the peg.

• Commodity-backed stablecoins (e.g., PAXG), pegged to physical assets like gold instead of fiat.

• Central Bank Digital Currencies (CBDCs), which function similarly to stablecoins but are issued by central banks and fully regulated.

What are relevant stablecoin use-cases?

This list is of course non-exhaustive, but I am trying to list the most relevant use-cases I am seeing today.

Cross-Border Payments & Remittances

Sending money across countries is often slow and expensive. Stablecoins enable fast, low-cost, and borderless transactions compared to traditional banking systems.

Store of Value & Inflation Hedge

In countries with high inflation or unstable banking systems, stablecoins provide a reliable alternative to local currencies.

Trading & DeFi (Decentralized Finance)

Stablecoins act as a safe haven in crypto trading, allowing users to exit volatile assets like Bitcoin without converting back to fiat. They are also widely used in lending, borrowing, and yield farming in DeFi.

Payments & E-Commerce

Businesses can accept stablecoins as payment, avoiding credit card fees and chargebacks, while enabling faster settlements. By that, stablecoins might have a significant impact on traditional finance and its payment rails, which is why - very simply put - why payment giants like stripe are so bullish on stablecoins.

On-Chain Settlements & Banking Alternatives

Stablecoins enable instant settlement between financial institutions and can serve as a foundation for blockchain-based banking services. This is the use-case, that the Bank of America CEO mentioned they would address - basically offering an “on-chain” bank account with the ability to seamlessly invest into different banking products.

Programmable Money & Smart Contracts

Stablecoins can be automatically managed by smart contracts, enabling new financial applications like subscription payments, tokenized assets, and automated payroll - programmable money is whole different and until now mostly untapped topic, which I personally believe to be huge.

Central Bank Digital Currencies (CBDCs) & Regulation

Governments and banks are exploring stablecoins as regulated digital cash, with CBDCs acting as state-backed versions. There is a lot a regulation and politics happening around this use-case. Understandably, Nations are highly protective of their currencies because they are fundamental to economic power, stability, and control. CBDCs could bring efficiency and innovation, but they also introduce major risks and challenges that governments must carefully navigate.

I already mentioned Stripe’s yearly letter in the “interesting news” section - I can highly suggest a read of the two pages on stablecoins in there, if you are interested to learn how one of biggest payment players in the worlds sees the potential of stablecoins.

Thanks for reading in 🤍

// Kai