New Order of Stablecoins: Market, Technology and Sovereignty Struggles

Introduction

Stablecoins, as a core component connecting traditional finance and the cryptocurrency asset ecosystem, are increasingly gaining strategic importance. From the early centralized custody model to the current stablecoins issued by protocols themselves and driven by on-chain synthesis and algorithmic mechanisms, the market structure has fundamentally changed.

At the same time, the demand for stablecoins in DeFi, RWA, LSD, and even L2 networks is rapidly expanding, further promoting the formation of a new pattern of coexistence, competition, and collaboration among various models.

This is no longer a simple market segmentation issue, but a deep competition regarding the "future form of digital currency" and "on-chain settlement standards". This report focuses on the main trends and structural characteristics of the current stablecoin market, systematically sorting out the operational mechanisms, market performance and on-chain activity levels, as well as the policy environment of mainstream projects, to help effectively understand the evolution trends of stablecoins and the future competitive landscape.

Stablecoin Market Trends

Global stablecoin total market value and growth trend

As of May 26, 2025, the total market value of global stablecoins has surged to approximately $246.38 billion, an increase of about 4927.64% compared to around $5 billion in 2019, demonstrating explosive growth. This trend not only highlights the rapid expansion of stablecoins within the cryptocurrency ecosystem but also emphasizes their increasingly irreplaceable position in areas such as payments, trading, and decentralized finance.

In 2025, the stablecoin market continues to maintain rapid growth, rising by 78.02% compared to the market value of 138.4 billion USD in 2023, currently accounting for 7.04% of the total cryptocurrency market value, further consolidating its core market position.

2019-2022: The market value of stablecoins surged from $5 billion to $167.9 billion, an increase of 32 times, mainly driven by the explosion of the DeFi ecosystem, increased demand for cross-border payments, and market risk aversion.

2023: Market capitalization fell by 17.57%, mainly due to the collapse of TerraUSD and tightening global cryptocurrency regulations.

2024-2025: Strong market capitalization rebound, growing by 78.02%, reflecting increased institutional participation and the continued expansion of DeFi applications.

Recent growth drivers

Macroeconomic financial environment:

Against the backdrop of increasing global inflationary pressures and turmoil in financial markets, the demand for "on-chain cash" has significantly risen among investors. The U.S. Treasury has defined stablecoins as "on-chain cash", providing a policy rationale for attracting traditional capital. Meanwhile, during periods of extreme volatility in crypto assets, stablecoins are also seen as a safe haven.

Technological advancements and cost advantages:

Some efficient public chains represented by Tron significantly reduce transaction costs, with almost zero fees for USDT transfers on the Tron chain, attracting a large number of trading users. High-throughput blockchains like Solana also promote the expansion of stablecoin use cases due to their high speed and low fee characteristics.

Institution adopts enhancement:

In 2024, BlackRock will issue a tokenized fund based on USDC for the on-chain exploration of assets such as bonds and real estate, highlighting the importance of stablecoins in institutional-level settlements. According to OKG Research's estimates: under an optimistic scenario where the global compliance framework gradually unfolds and institutions and individuals widely adopt it, the global stablecoin market supply will reach $3 trillion by 2030, with monthly on-chain transaction volumes reaching $9 trillion and annual transaction totals potentially exceeding $100 trillion. This means that stablecoins will not only stand alongside traditional electronic payment systems but will also occupy a structurally foundational position in the global clearing network. In terms of market capitalization, stablecoins will become the "fourth category of fundamental monetary assets" after government bonds, cash, and bank deposits, serving as an important medium for digital payments and asset circulation.

DeFi demand pull:

Citibank pointed out that stablecoins are the "main entry point" for DeFi, and their low volatility characteristics make them the preferred choice for value storage and transactions. According to a Chainalysis report, stablecoins account for more than two-thirds of on-chain trading volume and are widely used in scenarios such as lending, DEX liquidity provision, and mining. In 2024, the TVL growth of leading DeFi protocols like Uniswap and Aave is expected to be around 30%, with USDC and DAI as the main trading pairs. After the 2024 U.S. elections, the market value of stablecoins increased by $25 billion, further validating their core role in DeFi scenarios.

Stablecoin Market Structure and Competitive Landscape

Market Concentration and Overall Pattern

Currently, the stablecoin market is highly concentrated, with Tether's market capitalization reaching $150.335 billion, accounting for 61.27%; USD Coin's market capitalization is $60.822 billion, accounting for 24.79%. Together, the market share of the two reaches as high as 86.06%, forming a duopoly.

Nonetheless, emerging stablecoins are gradually rising to challenge the dominant position. For example, USDE launched by Ethena Labs has grown from $146 million at the beginning of 2024 to $4.889 billion, an increase of over 334 times, making it the fastest-growing stablecoin. Additionally, USD1 and USD0 also show a good market expansion trend, but in the short term, they are still insufficient to shake the dominant position of USDT and USDC.

Competitive Landscape Analysis

Market competition primarily takes place among three types of stablecoins:

Fiat-collateralized stablecoins: USDT and USDC are supported by USD reserves, boasting advantages in centralized exchanges and traditional finance due to transparency and compliance. For instance, USDT added a market cap of $30 billion in 2024, demonstrating its market trust.

Decentralized stablecoin: USDE, through a synthetic dollar mechanism and native yield model, is set to become a popular trading pair on Uniswap in 2024, with its locked-up volume increasing by 50%, rapidly rising in the DeFi ecosystem; meanwhile, DAI, relying on MakerDAO's decentralized governance, attracts DeFi users, but is smaller in scale, with only $3.631 billion.

Emerging stablecoins: USD1 rapidly expanded to $2.133 billion through institutional endorsement; USD0 attracted users with DeFi incentive mechanisms, reaching a market cap of $641 million.

Others: The collapse of TerraUSD in 2022 led to a trust crisis in algorithmic stablecoins, prompting the market to shift towards more transparent fiat-collateralized stablecoins, resulting in USDC's market share growing by approximately 10% between 2023 and 2024.

The Rise Logic of USDE

USDE is a synthetic dollar stablecoin based on Ethereum, developed by Ethena Labs, which uses staked Ethereum as collateral and employs a delta-neutral hedging strategy to maintain its peg to the US dollar. Its rapid growth can be attributed to the following factors:

Innovative Yield Mechanism:

USDE provides high returns to holders through the "Internet Bond" feature, sourced from the staking returns of stETH and the funding rate differential of perpetual contract markets. This high-yield model has attracted a large number of DeFi users and institutional investors, especially in a low interest rate environment where traditional financial products struggle to offer similar returns.

Deep integration of the DeFi ecosystem:

The widespread support of USDE on DeFi platforms makes it one of the preferred stablecoins for DeFi users. Users can easily trade, provide liquidity, or participate in lending without worrying about price fluctuations. According to DefiLlama, the locked amount of USDE on Uniswap has increased by 50%, reflecting its important position in the DeFi ecosystem.

Decentralization and anti-censorship features:

As a stablecoin fully based on crypto assets, USDE does not rely on traditional financial systems, which is significantly attractive to users pursuing decentralization, especially in regions where traditional financial services are limited or restricted.

Market demand growth:

With the expansion of the DeFi and cryptocurrency ecosystem, the demand for stablecoins continues to increase. USDE, as an innovative and fully decentralized stablecoin, meets the market's demand for new types of stablecoin solutions.

Institutional Support and Collaboration:

The collaboration between Ethena Labs and well-known crypto investment institutions and exchanges has enhanced the market confidence and liquidity of USDE.

Marketing and Community Engagement:

Ethena Labs quickly attracted the attention of users and developers through effective marketing strategies and community incentive programs, promoting the adoption of USDE.

The Challenges of Emerging Stablecoins

USD1: Issued by World Liberty Financial, USD1 has a market capitalization of $2.133 billion, ranking 7th. Its market cap skyrocketed from $128 million to $2.133 billion in just one week, showing a rapid growth momentum.

WLFI is associated with the Trump family and has received a $200 million investment, enhancing institutional endorsement. The New Money report indicates that USD1 has been selected as the settlement currency for significant transactions, such as the cooperation projects with the Pakistani government, further enhancing its market influence.

USD1 is expanding rapidly through exclusive agreements and institutional adoption, but its political background may pose regulatory risks.

USD0: The USD0 issued by the Usual platform has a market capitalization of $641 million and is ranked 12th. According to the Usual Blog, it attracts users through the USUAL token incentive mechanism, allowing holders to participate in governance and share in the platform's profits.

USD0 combines the low volatility of stablecoins with the yield potential of DeFi, attracting users who focus on decentralized innovation.

The unique positioning of USD0 in the DeFi ecosystem brings growth potential, but it needs to improve market awareness and liquidity.

Emerging stablecoins challenge the market through differentiated strategies, but it is difficult to shake the dominance of USDT and USDC in the short term.

Analysis and Comparison of Mainstream Stablecoins

This section provides a systematic analysis and comparison of the top five mainstream stablecoins ranked by market capitalization from the perspectives of mechanism structure, asset support types, liquidity and application scenarios, and risk points.

Core Parameter Comparison Table

| Parameter | USDT | USDC | DAI | USDE | USD1 | |------|------|------|-----|------|------| | Issuer | Tether | Circle | MakerDAO | Ethena Labs | World Liberty Financial | | Market Cap ( million USD ) | 1503.35 | 608.22 | 36.31 | 48.89 | 21.33 | | Mechanism Type | Fiat Collateral | Fiat Collateral | Crypto Asset Collateral | Synthetic Asset | Fiat Collateral | | Collateral Assets | Cash, Short-term Bonds, etc. | Cash, Short-term Treasury Bills | ETH, USDC, etc. | stETH | USD, Treasury Bonds | | Governance Model | Centralized | Centralized | Decentralized | Semi-Centralized | Centralized | | Audit Frequency | Quarterly | Monthly | Real-time | Real-time | Unpublished | | Main Application Scenarios | CEX Trading, Payments | Institutional Settlement, DeFi | DeFi Lending | DeFi Yield | Payments, Settlement | | Regulatory Compliance | Controversial | High | Medium | To Be Observed | To Be Observed |

liquidity and trading pair distribution

The liquidity of mainstream stablecoins such as USDT and USDC is extremely abundant, with deep trading pairs available on the vast majority of mainstream exchanges as well as decentralized trading platforms. They almost cover all major public chains: USDT/USDC can be traded on Ethereum, Tron, Solana, BSC, Polygon, and other chains; whereas emerging stablecoins primarily launched on specific public chains and some centralized exchanges in the early stages. Recently, the Tron network introduced zero fees for USDT, further enhancing the trading volume and liquidity of USDT on that chain. Overall, USDT and USDC are the most globally liquid stablecoins, while the liquidity of other stablecoins is concentrated in specific ecosystems and exchanges.

Reserve Transparency

Reserve transparency is a key factor in assessing the credibility of stablecoins. Below is a detailed analysis of the reserve transparency of various stablecoins:

USDT:

Reserve situation: Claimed to be backed by cash, bank deposits, short-term government bonds, and other assets.

Transparency: Every Quarter