Preparing For Mass Adoption | Stablecoin Chapter 2

Stablecoin is enjoying its breakout moment with headlines dropping non-stop recently:

Genius Act passed.
Stripe acquired Privy + Bridge.
$crcl pumped 7x from its IPO price
Plasma speedrun filled a $1B deposit cap.
Tether is now the 19th largest entity in terms of T-bill investments.
Mastercard partner with chainlink allowing users buy stable on dex.
Banks, Big tech and Asia regions are rushing to launch their own stablecoin.

Regulation was once viewed as a barrier for stablecoins. TradFi bro were hesitant to enter the space due to a lack of understanding, alignment, and proper compliance tools. However, as we gain clarity on stablecoin regulation, what was seen as a barrier has become a catalyst.

According to Fireblock, regulatory frameworks have boosted business confidence in stablecoins by 80%. Meanwhile, 86% of firm already have their stablecoin infra in place, this explains that banks and institutions have been preparing for this shift all along.

So why are stablecoins suddenly in the spotlight?

Because they solve real problems.

Some of the notable benefit of stablecoin include:

1) Instant and cheaper cross-border txs transaction, giving emerging markets permissionless access to USD , potentially more efficient FX market onchain etc.

2) Stable can create more demand for t-bills and US is more than happy to exert dominance and sell their debt with that.

Thanks to the public attention that Genius ACT has attracted. I believe we are walking into an era where the next wave of payment-focused stablecoins adoption will driven by the non-crypto native community, aka the mass adoption.

The Next Step

IMO, the expected growth in stablecoin adoption, particularly in payments, cross border and personal-banking, will create a ton of opportunities for stable related businesses.

Today, we will brainstorm the next step of stablecoin together:

In my mind there are 4 directions that the landscape is heading:

More Than Trading:

• Stablecoin is going mainstream. From this moment, stable will serve far more purposes than just trading pairs. Payment, saving, or even new business that were previously constrained by the T+1 settlement delay.

Compliance Tooling:

• More mature, compliant friendly solutions (Like tax / fraud reporting etc) as issuers need a way to comply with AML and policies.

24/7 Onchain FX Market :

• A more efficient, 24/7 Forex market with instant settlement.

More Demand For Yield:

• More RWA strategy , fixed rate earning product and aggregation product (Such as index) as landscape becomes increasingly fragmented.

More Than Trading:

Stablecoin began with a simple mission, giving crypto traders a volatility hedge and a safe haven to hold a crypto asset. USDT, fully backed stablecoins, leverage it’s first mover advantages to become the dominant trading pair on major exchanges. USDC followed as the second most popular option. At the core, stablecoins were created to serve trading and hedging needs in the early phase of crypto.

• The New Trend:
  Beyond trading, Payment have emerged to be another core feature of stablecoins. The trend becomes increasingly obvious over the year. In the 2025 crypto adoption Index report, it shows that 8 out of 10 countries with the fastest-growing crypto adoption is actually driven by P2P and remittance demands.

Of which, the growth is concentrated in emerging markets, where the purpose of stable is to offer permissionless access to dollar , something that was not easily accessible in low-income countries. For business in these regions, dollar backed stables provide the much needed protection they need to hedge against their volatile local currencies, and I expect the adoption to grow even more as the confidence picks up.

Tradingview

• Cross Border Payment and E-commence

Another big usecase is cross-border payment. The benefit is obvious: Instant settlement, lower costs, transparency, and permissionless USD access. These features unlock previously trapped capital that plagued business by the slow and opaque cross-border transfer system.

A good example, @ConduitPay , a cross-border payment solution backed by @dragonfly_xyz, reports that they have experienced an surging demand from import/export businesses in Latin America + Africa , these place have driven a 16x growth in transaction volume on their platform, and this growth has helped them to achieve $10B in annualized payment volume, reflecting the growing demand of stablecoin solution in cross border payment.

Meanwhile, E-commerce is also opening new doors for stablecoins, mainly because of their ability to boost profits for both merchants and payment processors. According to a16z crypto, major retailers like Walmart can boost their revenues by up to 62% by lowering the network gatekeeper fees with stablecoin payment. Whereas, payment processors like stripe also benefit from the margins and will probably incentivised to integrate stable too.

https://a16zcrypto.com/posts/article/how-stablecoins-will-eat-payments/

Web2 payment giants aren’t just watching , they are already taking action and stablecoin will soon be everywhere. Some example:

Shopify accept USDC payment via Stripe.
Paypal launched a $1B mcap pyUSD and it can be used as a payment rail.
Walmart and Amazon’s plans to develop their own stablecoins.

And more to come….

As we lifted the regulatory barriers, stablecoin is ACTUALLY ready for explosive growth.

We will see more volume in cross border stablecoin transfer from emerging markets, more payment conducted in the form of USDC on SOL / Base, via cex wallets / phantom / neo-bank / fintech app, more sales in e-commerce with stablecoin etc.

The fun just start now.

Compliance Tooling:

Trust is important for businesses to adopt stablecoins. The GENIUS Act has now established the regulatory framework for US issuing stablecoin, and I expect there is a growing need for compliance tools as new issuers enter the market.

To understand the role of compliance tooling in the stablecoin stacks, let’s go via some of the basic and background together.

While regulations may vary by state, there are 2 major regulatory frameworks that are shaping the stablecoin landscape: MICA and GENIUS Act.

Below is a table summarizing the key differences between these frameworks side by side but I’m not going into the details here.

https://eu.ci/mica-vs-genius-act-2025/

In short, the freshly baked Genius ACT framework is serving 2 key purposes: Consumer Protection and National Security. Chainalysis summarised very nicely and here are the basic:

1.Consumer Protection:

Reserve: Must be fully backed with liquid assets such as T-bills with 93-day or shorter maturity or cash etc.
Disclosure: Monthly public disclosure of reserve composition, their redemption policies and any associated fees on website.
Restriction: Prohibit to use “USG” and any other “legal” tender for marketing or promotion material.
Bankruptcy Protection: Stablecoin holders have first priority in insolvency.
No Yield: Issuers is prohibited from offering yield or interest on 1:1 backed stablecoin.

2.National Secruity Provisions:

Bank Secrecy Act Compliance: AML, customer identification, monitoring transaction and recordkeeping, report any suspicious activity etc.
Technical Enforcement Capabilities: Able to freeze and burn token as an issuer. Ability to bar non-compliant foreigners issuers from the US mkt etc.
Sanctions Enforcement Coordination: Before blocking transactions from foreign entities, the Treasury Secretary must attempt to coordinate with stablecoin issuers where possible.

To qualify as a “certified” stablecoin issuers, business need a way to identify, freeze, track, public disclose their reserve and communicate properly with the affected party.

This is where compliance tool providers play a crucial role. For example, chainanalysis sential can monitors transactions across 35 risk behavior categories in real-time. The platform provide the APIs that enable issuers to freeze and blacklist addresses, stop, mint, or burn token whenever suspicious activity is detected.

This layer become increasingly more important lately because there is a trend where some of the sanctioned entities turn to stablecoins as a transfer medium whenever they are unable to access U.S. dollars through traditional banking,

Moreover, funds from scams and money laundering are partly being held in stablecoins these days thanks to the price stability USD provides. We are seeing a shift actually, where the % of stolen fund held in stablecoin has jumped from 20% to nearly 50%+ over the past few years.

This is exactly why a strong compliance layer is important. It will help to identify, filter, and report suspicious transactions, giving businesses and all the new users the confidence they need in the system.

Chainanalysis crime report

The feature do not restricted to existing infrastructure. All the platform that deals with stablecoins will need to become more compliance-friendly over time.

For example, coinbase acquired@liquifi_finance""> @liquifi_finance recently. Liquifi is a platform to handle token vesting, airdrop, or even payroll that comes in the form of stablecoin. They begin providing tax reporting tools and ensuring that their tool is following compliance across different countries.

Fireblocks has developed a similar toolkit like chain analysis, but they offer more, including configurable compliance policies alongside integrated KYT, AML, and travel rule compliance features. Other players in this space include TRM Labs, Elliptic, and Polyflow, all building out the compliance layers.

While this might not be the most sexiest direction for the industry, it’s a necessary step toward gaining trust and adoption from traditional businesses.

Onchain FX Market

Following the US regulatory approval of stablecoin, It is inevitable that more countries will adopt stablecoins and tokenize their currencies, and naturally, this transition is likely to give rise to an onchain FX market that offers 2 benefits in my mind: A 24/7 market and the increased retail participation due to the accessibility.

Imo the on-chain FX market can be broken down into 2 major layers: the issuers and the trading venues. For simplicity, we will not dive into on/off ramp for now, as it deserves its own analysis in the future given that the case should be discussed case by case, country by country.

Today, USD stablecoins dominant 99.79% of the market and EURC is sitting at 0.2%, major issuers of non-USD asset are now Circle, Paxos and Tether. But in the near future, banks and institutions that are following the compliance can launch their own stablecoin too.

Stablecoin Currency

Looking closely , the demand for non-USD stablecoin trading is growing gradually. Most USD/non-USD trades are happening in AMM, specially Aerodrome and Pancakeswap. Of which, the USDC to EURC swaps on aerodrome is actually 30 bps cheaper than exchanging in money mover like Wise, even after considering slippage and fees (excluding the on-off ramp fee).

Aerodrome vs Wise

Given the competitive exchange rates and the broader economic uncertainties under trump, we begin to see growth in EURC, with daily active addresses doubling from 600 to 1,300 since Feb, while newer stablecoins like CAD and BRZ started to enter the market with a very small but initial market presence.

Base non-USD stablecoin txs address

More than that, governments and regulatory bodies across the EU, HK, Singapore, Japan, and the Middle East are actively developing regulatory frameworks to facilitate onboarding asset on-chain, and that included locally currency-backed stablecoins, which is also another sign that the widespread acceptance of stablecoin is the perfect time for an on-chain FX market.

The DeFi-FX Market:

While issuers like tether, circle , paxos, banks and fintech parties are pushing for stablecoin adoption, some onchain projects are attempting to innovate in the FX space by adding the “defi’ element on it .

For example , @injective provides a 24/7 market with trading up to 100x leverage on EUR and GBP pairs, while @MentoLabs uses CDPs to enable multi currency exposure while directly holding the underlying asset etc. An exciting landscape that can provide more farming / trading ground for the users.

With that being said, there are 2 major hurdles in the current onchain FX landscape.

1) on-chain liquidity remains notably thin , the largest single pool contains just $1.3M in EURC and this is not healthy for trading in size.

2) The friction of on-offramp between local currency (In bank) and stablecoin continues to be the main obstacle in competing with traditional FX systems’ efficiency.

HIGH YIELD , MOR YIELD

Everyone love DeFi, or what we call personal finance. In the near future, anyone who gets their hands on USDC will eventually think about how to generate yield with their idle capital.

While regulation largely benefits payment stablecoins, the growth of the stablecoin powered yield market can’t be overlooked. Over the year, the Mcap of YBS (Yield Bearing Stable) like Ethena and Sky has grown 6x to $6B, and the demand for leveraging exposure, or farming has become the main catalyst driving TVL in lending protocols like Aave, Euler, and Syrup to ATH.

But the landscape we’re facing now is very different from the past. During defi summer, we enjoyed absurd amounts of yield that came from flywheel-style tokenomic designs, but the sustainability often depended on the token price itself. So when token prices fell, the protocol stopped working or hard rugged.

Ever since Ethena’s success, the CeDeFi model has become more prevalent, where depositors lend their stables to a team running off-chain strategies to generate real trading yield in return. This has led to an era of YBS boom, where projects are taking deposits to run on/off chain strategies. This movement can seperate the token price from being the sole reason to use the protocol but often accrues less value to the token as well.

The most common yield-generating strategies in the market mostly come in 3 forms: T-bills, delta neutral, and money market. While there are many more strategies out there, these are deemed the “battle-tested” yields in the market. The yield bearing stablecoin strategies together print a total of ~$1.5M per day and the trend is still healthy.

stablewatch yield dashboard

RWA Strategy / Money Market:

Yield bearing stables are just the tip of the iceberg.

In the next phase of the yield market, IMO new asset classes like RWA strategies from TradFi combined with DeFi elements (like looping) will attract a lot of interest from institutions and funds.

Take a recent example: ACRED (Apollo Diversified Credit Securitize Fund) investors can deposit $ACRED into Morpho Blue market and borrow USDC against it. Borrowers can then leverage the USDC and reinvest into ACRED, forming a loop with leverages. In this setup, ACRED investors enjoy leveraged yield, while USDC providers (retail/funds) earn interest paid by ACRED.

Below is a good illustration by gauntlet and @redstone_defi .

RWA strategy

This is just one example. Sooner or later, TradFi players and funds will realize they can tap into DeFi’s massive stablecoin liquidity and start bringing their sophisticated yield strategies and tokenized financial products on-chain and borrow stablecoin against it. The market can grow indefinitely large as long as the underlying asset (Such as USCC giving 7.7% yield) can provide sustainable and attractive yield to accredited investor.

This is a new yield source generated from tokenized RWA assets that demand leverage.

These platforms are working to maintain compliance while aligning with institutional needs. However, there are no clear legal guidelines regarding these products, so legal and compliance risks remain one of the main hurdles at the moment.

Fragmentation:

As we have more strategy and yield (50+ projects and it’s growing everyday), the landscape becomes increasingly sophisticated and fragmented.

New users have no clue where to deploy their stables for the best yield or how to allocate their portfolio based on risk-adjusted measurements. More importantly, there are many amazing strategies that lack public exposure and they needed that.

In this case, an aggregation platform or a unified “earning” page , preferably with a risk disclosure dashboard can connect the dot between the eager farmers and the power strategies.

We need a product similar to Binance Earn, but it is on-chain with more transparency and detailed risk disclosures.

Projects such as @capmoney, @Perena , and strategy curator@gauntlet_xyz have been building aggregation platforms that can abstract away the complexity of finding, managing, and deploying capital when it comes to farming. They put together a comprehensive infra that enable user to “one-click” expose to the best yield (Either on-off chain yield), only asking for a slight return of management fee.

Cap Money:

Cap Money on megaeth brings together all the top on-off chain yielding strategies and unifies their exposure into ONE stablecoin/pegged asset that is also composable with any DeFi.

The allocation of capital depends on strategy performance and develops a self-reinforcing market where only the most competitive yields can stay.

But that’s just one part of their product. For a stablecoin to gain adoption, it needs trust. Cap has created a new market where restakers can delegate their assets to strategy providers on eigenlayer to provide the “trust” that stablecoin holder need. In return, these restakers receive a % of the yield as compensation for the trust they provide.

A very interesting idea that aggregate yield “securely”.

Type 3 stablecoin by cap money

Perena:

SOL is known for fast and cheap transactions, making it the perfect blockchain for daily stable payments and on-chain FX markets.

Perena has the vision of StableBank, a unified stablecoin liquidity layer where on chain liquidity of USDC, USDT, PYUSD, BENJI, AUSD, and other branded stablecoins is consolidated into one AMM, which is represented by one receipt token, USD*. With this design, it can create a deep pool of stable liq that gives swapper the best stable exchange rates on SOL.

In Perena v2, they will add smart routing to scan all pools and OTC venues to ensure the best in-space swap rates (Even outside of SOL). The engine will also support multiple currencies (Such as EURC, GBP etc) and cross-chain swapping capability to prepare for the mass adoption of stablecoin.

The unification doesn’t stop there - USD is more than just a swapping engine. It’s an all-in-one platform for saving and earning. Perena, the StableBank network, partners with more than 20 projects to source the best yield & strategies for USD holders. This effectively connects strategies that need public exposure with hungry stablecoin farmers who are looking for yield, all happen through one interface.

Stablebank network

Gauntlet USD Alpha

Gauntlet has released their new product, Gauntlet USD Alpha ($gtUSDa), a vault that can dynamically deploys stablecoin into different lending markets for the best risk-adjusted yield.

The strategy is managed by the Gauntlet team through Aera Finance, a vault infrastructure they developed to implement off-chain strategies to the blockchain. The strategies is executed and overseen by “Guardian”, a designated actor who helps customers achieve their on-chain objectives and is appointed by the vault manager.

The objective of Gauntlet USD Alpha vault is to allocates depositors’ stablecoins into lending markets that is currently giving the best real yield while automatically rebalancing positions according to their risk guidelines.

During backtesting, Gauntlet’s risk-adjusted strategy on morpho (Base + ETH) outperformed the benchmark yield on Vaults.fyi (7.76% Alpha Yield vs 4.46% Benchmark yield). The vault is live now and is generating 7.2% yield, with the majority of allocations directed to $midasUSD and $gtusdcf.

Gauntlet stable alpha abstract away the complexity of discovering real yield and managing risk by providing a platform for passive farmers seeking risk-adjusted returns.

Disclaimer*

I have invested in cap / perena.

Conclusion:

The future of stablecoin is bright.

On one side, the regulatory progress is accelerating the mainstream adoption of stablecoin. Genius Act has provided the confidence for TradFi, Fintech, or payment rail to enable their integration with stablecoin through clear compliance frameworks.

Meanwhile, emerging countires will continues to adopt stablecoins for cross-border transactions and USD exposure, while countries tokenizing their currencies will create a natural 24/7 FX market that is compatible with DeFi.

More aggressive firms can now execute RWA strategies on-chain (such as looping) by tapping into the massive on chain stablecoin liquidity, where retail users can earn yield from providing liquidity. The mass adoption of stablecoins will also stimulate demand for on-chain personal finance, leading to a growing demand for yield-bearing products. Fragmentation will also be addressed by projects like Cap, Perena, and Gauntlet.

Today, stablecoin is no longer “ just another internet money”, but an actual asset that proves the real world implication of blockchain. 24/7 , Instant settlement.

The acceleration starts now.

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