Huobi Growth Academy | In-Depth Research Report on Stablecoins: Anchor Assets for the Next Round of Financial Transformation

I. Introduction: The Systemic Role of Stablecoins is Reshaping Global Financial Logic

In the past five years, stablecoins have evolved from tools for cryptocurrency trading to core assets in on-chain finance, gradually embedding themselves into the global financial system. Against the backdrop of the nearing end of the Federal Reserve's interest rate hike cycle, the impact on the dollar's hegemony, and the quest for efficiency transformation in cross-border payment systems, the role of stablecoins as "on-chain dollars" is being widely accepted. From the passage of the "GENIUS ACT" in the U.S. in July 2025, to G7 countries recognizing stablecoins as "digital dollar alternatives," and emerging markets incorporating stablecoins into their foreign exchange policy perspectives, a financial competition surrounding "anchored assets" has begun. Stablecoins are not only liquidity engines in DeFi but also key bridges between Web3 and the real economy. This article will systematically explore the types, development trends, regulatory landscape, sovereign competition, and investment opportunities related to stablecoins.

II. Market Status: A Trillion-Dollar Scale, Structural Differentiation, and Explosive Use Cases

Currently, the overall scale of the stablecoin market has surpassed $250 billion, exhibiting a highly concentrated pattern, with Tether's USDT holding an absolute dominant position, boasting a market capitalization of $150.335 billion, accounting for as much as 61.27%, almost single-handedly supporting half of the entire sector. Following closely is Circle's USDC, with a market cap of $60.822 billion, representing 24.79%. Together, they account for approximately 86.06% of the entire stablecoin market, forming a typical "dual oligopoly" monopoly structure. This structure has deeply embedded itself into the infrastructure of the crypto financial market, with USDT and USDC establishing robust usage networks and trust foundations in different regions and ecosystems.

USDT is currently the most widely used stablecoin, with its advantages not only in market capitalization and circulation scale but also in its global layout and extensive real-world use cases. It is widely distributed across multiple mainstream blockchains, including TRON, Ethereum, BNB Chain, and Solana, with particularly active applications on the TRON chain, which accounts for more than half of its total issuance. The relatively low transaction fees on TRON have made USDT the preferred choice for OTC and CEX settlements in regions such as Asia, Latin America, and the Middle East. Additionally, USDT plays an irreplaceable role in cross-border remittances, stable value storage, and DeFi liquidity provision in emerging markets. For example, in high-inflation countries like Venezuela, Turkey, and Nigeria, USDT has become the "alternative dollar" used by the public and even serves as a settlement tool in the gray financial system. This role as an "on-chain dollar" has gradually transformed it from a trading tool into a base currency, taking on some functional roles of "stable assets."

More importantly, Tether's profit model reflects its strong financial capability and influence in the capital markets. In the first half of 2025, Tether achieved a net profit of over $5.7 billion, making it one of the most profitable companies in the entire crypto industry. Most of this revenue comes from its substantial holdings of short-term U.S. Treasury bonds, which not only support its stablecoin reserves but also give it actual influence in the short-term interest rate market. Research shows that for every 1% share Tether holds in the U.S. Treasury market, it could impact short-term rates by 3.8 to 6.3 basis points, with its structural penetration into the U.S. Treasury market even surpassing that of some small to medium-sized sovereign nations. In this context, USDT is no longer just an on-chain utility token but is gradually evolving into a "stablecoin financial institution," with its systemic impact on global financial markets increasing.

In contrast, USDC's development path is more focused on "compliance" and being institution-friendly. It enjoys higher trust and integration in the U.S. domestic market, financial services system, and Web3 enterprise payment sector. Circle continues to collaborate with regulators and promotes transparency audits, legal reserves, and stable interest rate distributions, attempting to establish a "standard paradigm" in the stablecoin field. However, this cautious development path has made USDC relatively conservative in the face of high-frequency trading markets in Asia. It primarily serves as a "trust stablecoin" characterized by safety and audit traceability, favored by institutions merging TradFi and CeFi, but it still lags behind USDT in grassroots circulation and trading frequency.

Although the dual oligopoly of USDT and USDC is unlikely to be broken in the short term, several emerging stablecoin projects have risen strongly in recent years, becoming new variables worth noting in the market structure. The most representative among them is USDe, launched by Ethena, which is a "synthetic stablecoin" supported by hedging ETH perpetual contract positions and yield protocols. Since its launch in early 2024, USDe's market cap has skyrocketed from $146 million to $4.889 billion, an increase of over 334 times, making it one of the fastest-growing stablecoin projects in the past two years. Its growth is partly due to the popularity of the "DeFi fixed income" narrative and also proves the market's genuine demand for non-custodial, contract-driven stable assets. Additionally, USD1, USD0, and others have gained capital favor in different narrative tracks and are gradually entering specific stablecoin use case demands. However, in terms of market cap and user base, these emerging stablecoins have yet to form the capability to shake the mainstream structure, and their development still needs to be further solidified in risk control, market adaptation, and liquidity building.

Overall, the current stablecoin market has entered a stage of extremely high concentration and clear dominant patterns. USDT, with its extreme scale, strong on-chain circulation capability, and penetration into macro-financial instruments, has become one of the most systemically important assets in the crypto economy; while USDC represents a direction of compliance and transparency in stablecoin development, possessing stronger institutional trust value. Emerging stablecoins provide experimental and diversified options, injecting vitality into the market. As global crypto regulatory policies gradually take shape, the stablecoin market will face challenges of compliance reshuffling while enjoying the dividends brought by the wave of financial disintermediation. Whether USDT can maintain its dominant position, whether USDC can expand its influence, and whether emerging stablecoins can break through will remain core focal points in the market evolution over the coming years.

III. Regulatory Competition: Stablecoins as a New Variable for Financial Stability

The rapid development of stablecoins is pushing an asset class that originally belonged to the "crypto fringe tools" to the center of macro-financial policy and regulatory discussions. As their scale continues to expand and their uses become increasingly widespread, stablecoins are no longer merely a technical innovation or decentralized experiment but have become key variables that could impact monetary policy, capital flows, and even systemic financial risks in reality. Global regulatory agencies are undergoing a subtle and profound power restructuring game in the face of this trend: on one hand, they attempt to establish rules and boundaries for this new asset class to maintain the stability of the traditional financial system; on the other hand, they must also acknowledge that stablecoins are filling the gaps in the existing financial system, particularly playing an increasingly important role in cross-border payments, dollar alternatives, and financial inclusion.

Currently, major economies have not converged on a regulatory path for stablecoins but have shown clear strategic differentiation. Taking the United States as an example, its regulatory agencies have been embroiled in long-standing policy disputes over stablecoins. On one hand, multiple departments, including the U.S. Treasury, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), have offered different interpretations regarding the nature of stablecoins, with no consensus on core issues such as "whether stablecoins are securities," "whether they belong to payment systems," and "whether they should be issued by banks." On the other hand, the dollar-dominated international financial order makes it difficult for the U.S. to ignore the potential impact of stablecoins on its monetary policy transmission mechanism and international financial standing. The hundreds of billions of dollars in short-term U.S. Treasury bonds held by Tether have already had measurable effects on money market rates, making stablecoins no longer a "crypto issue" that can be set aside but rather an actual financial variable. Recently, the U.S. Congress has gradually pushed the "Payment Stablecoin Act" (Clarity for Payment Stablecoins Act) and strengthened the regulatory framework of "issuer licensing, reserve audits, and bank custody," attempting to provide clear expectations for the market, but this process is bound to be slow due to political and technical competition.

In the European Union, the situation is somewhat different. The EU has taken the lead in launching a comprehensive regulatory framework for crypto assets, MiCA (Markets in Crypto-Assets Regulation), which specifically establishes two regulatory categories for stablecoins: "Electronic Money Tokens (EMT)" and "Asset-Referenced Tokens (ART)," setting relatively strict requirements for transparency, reserves, capital, and issuance limits. Although MiCA is widely regarded as one of the "strictest" crypto asset laws globally, its introduction also sends a clear signal: regulators are no longer attempting to suppress crypto but are instead aiming to incorporate it into a system of institutional constraints. For stablecoin issuers, entering the European market will require obtaining local licenses and complying with central bank-level regulatory requirements, undoubtedly raising the market entry threshold and potentially prompting large stablecoin issuers to transition towards compliance.

Meanwhile, the regulatory landscape in Asia exhibits a coexistence of pragmatism and competition. For instance, regions like Singapore, Japan, and Hong Kong have relatively flexible regulatory frameworks for stablecoins, emphasizing a balance between risk management, user protection, and financial innovation. The Hong Kong Monetary Authority recently expressed clear support for the development of fiat-pegged stablecoins and even proposed the possibility of promoting a "local Hong Kong dollar stablecoin," demonstrating an open attitude at the policy level towards the prospects of "regional on-chain currencies." Gulf countries in the Middle East, such as the UAE and Saudi Arabia, are also actively introducing stablecoin settlement mechanisms and promoting the coexistence of central bank digital currencies (CBDCs) and stablecoins, aiming to build the next generation of cross-border payment networks. It is evident that under the regulatory uncertainties of the U.S. and EU, an increasing number of emerging markets are attempting to leverage stablecoins to compete for the discourse power in the formulation of fintech rules.

The core of the stablecoin regulatory competition also reflects a more fundamental issue: the irreconcilable contradictions between monetary sovereignty, financial stability, and technological innovation. Over the past few decades, the rights to issue currency and payment settlement systems have been primarily held by central banks and commercial banking systems, while stablecoins, as a "privately-led digital currency," have rapidly embedded themselves into global payments, trading, financing, and storage within just a few years, circumventing traditional currency generation paths. This disintermediation characteristic challenges the core logic of the traditional financial order and poses an invisible threat to the central bank's role as the "lender of last resort." Especially in the event of systemic crises or black swan events, if stablecoin users collectively run on their holdings without official backing, it will inevitably bring significant liquidity risks to the entire on-chain financial ecosystem and stablecoin issuing institutions, potentially spilling over into the TradFi market and triggering broader risk externalities.

For this reason, we see that central banks and regulatory agencies worldwide have yet to reach a unified consensus on "how to define stablecoins." They are neither traditional electronic money nor fully qualified bank liabilities. They resemble a "third type of currency" suspended between traditional finance and crypto networks, which cannot be fully incorporated into existing legal frameworks. The regulatory competition surrounding this gray area will continue in the coming years. Meanwhile, some central banks are also attempting to proactively promote CBDCs to compete with stablecoins for dominance in payment and storage. For example, China's digital yuan, the European Central Bank's digital euro, and India's e-Rupee have all entered practical testing and small-scale circulation stages. Behind this trend, a strategic competitive relationship between the official currency system and the on-chain stablecoin system is beginning to emerge.

Ultimately, stablecoins are no longer just "ancillary tools" in the crypto world but are becoming bridges connecting on-chain and off-chain, tradition and innovation. They may be solutions for financial inclusion, amplifiers of systemic risk, or triggers for the restructuring of global financial power structures. In this process, regulatory policies will play a key role: they may accelerate the transformation of stablecoins towards compliance, enhancing their functional attributes as "new digital dollars"; or they may suppress their vitality and innovation through excessive restrictions, forcing capital and technology to flow to more policy-friendly regions. Therefore, the future of stablecoins depends not only on technological iteration and market choices but also on the outcomes of the global regulatory ecosystem competition. Stablecoins are not an isolated track but a deep competition regarding the next generation of currency forms and the reconstruction of global financial rules.

IV. Trend Outlook: Decentralized, Multi-Currency, and Protocol-Native Stablecoins

The stablecoin market is transitioning from the first phase dominated by "centralized dollar stablecoins" to the second phase characterized by the coexistence of "decentralized, multi-currency, and protocol-native" stablecoins. This evolution is not merely an expansion in the number of currencies but a comprehensive reconstruction of stablecoin logic paradigms, underlying governance structures, and monetary sovereignty models. The development of the new generation of stablecoins not only reflects the technological and capital innovation capabilities within crypto finance but also mirrors the proactive transformation of the on-chain monetary system in addressing the deficiencies of the traditional financial system, expanding application boundaries, and engaging in regulatory competition.

First, decentralized stablecoins are experiencing a resurgence. In the early models like DAI, over-collateralization and on-chain liquidation mechanisms were seen as the "ideal model" for resisting censorship and building trust. However, due to low capital efficiency and severe price volatility, they once lost their dominant position. Since 2024, influenced by the rising regulatory risks of centralized stablecoins like USDT and USDC and the increased reliance on settlements, decentralized currencies like DAI, sUSD, LUSD, and RAI have begun to regain favor among developers and DeFi protocols, becoming important "alternative currencies" against regulatory suppression and payment censorship.

Notably, the new generation of projects no longer solely rely on pure over-collateralization or algorithmic stabilization models but instead integrate various asset combinations, risk hedging, and on-chain interest rate adjustment mechanisms. For example, Ethena's USDe stablecoin combines spot dollars with a delta-neutral strategy for shorting perpetual contracts, introducing on-chain derivatives to provide yield support for the stabilization mechanism, creating a new path for "yield-driven stablecoins." Its accompanying on-chain interest rate indicator, DOR (DeFi Option Rate), attempts to establish a more realistic "yield curve" for stablecoins, anchoring them to the true time value of funds. These explorations signify that stablecoins are not merely asset tools but also serve as anchoring centers for interest rates, exchange rates, and liquidity in on-chain financial markets.

Secondly, the trend of multi-currency anchoring is accelerating. Although dollar stablecoins remain the market's mainstay, the global trend of de-dollarization in regulation is becoming increasingly evident, prompting the crypto market to develop local or commodity stablecoins pegged to currencies such as the euro (EUR), Japanese yen (JPY), Chinese yuan (CNY), Hong Kong dollar (HKD), and even gold. These diversified stablecoins not only facilitate localized payment scenarios but may also become important tools for residents in emerging markets to hedge against currency depreciation and inflation. For instance, stablecoins like EURS from Stasis, EURe from Monerium, and various Hong Kong dollar stablecoin experiments are gradually expanding the ecosystem of non-dollar stablecoins. In markets across Asia, Africa, and Latin America, especially in countries with strict capital controls, stablecoins have become important "intermediary currencies" for the gray economy, crypto remittances, and e-commerce trade, creating actual demand for multi-currency stablecoins.

At the same time, central banks in various countries are gradually promoting compliance models that coexist with local currency-pegged stablecoins. Regions like Singapore, New Zealand, and Hong Kong are exploring compliant paths for banks/trusts to issue stablecoins through regulatory sandboxes. In the future, a possible model could be: centralized dollar stablecoins serving global liquidity and trading needs, while compliant local currency stablecoins focus on "domestic on-chain settlements" for local residents, jointly constructing a "dual-track" on-chain monetary system.

At the forefront is the development of protocol-native stablecoins, marking the deep embedding of stablecoins within the on-chain economy itself. Unlike independent currencies like DAI or USDC, protocol-native stablecoins are those issued endogenously within a public chain or DeFi protocol, collateralized by its internal assets (such as staked tokens, gas tokens, RWA, etc.), and fully serving the protocol. Typical examples include crvUSD launched by Curve, GHO promoted by the Aave community, sDAI from MakerDAO, USK on Oasis, and potential re-staking stablecoins from the EigenLayer ecosystem. These currencies often combine liquidity staking, re-collateralization mechanisms, protocol governance rights, and income distribution models, making the issuance of stablecoins a core component of protocol liquidity, governance rights, and revenue flow.

Protocol-native stablecoins possess several characteristics: stronger composability, higher native liquidity, embedded governance mechanisms, and a high degree of binding to protocol growth. This design provides protocols with an autonomous monetary system, freeing them from reliance on external stablecoins like USDC, and helping to create a more stable, decentralized, and censorship-resistant financial ecosystem. Furthermore, stablecoins may also become tools for the protocol's "monetary policy," such as adjusting liquidity by controlling collateral parameters, yield rates, and redemption mechanisms, thereby influencing the deflation/inflation cycles of the internal economic system, achieving a true "on-chain sovereign currency experiment."

In the long term, stablecoins will evolve in three simultaneous directions: (1) centralized stablecoins will strengthen regulatory compliance and serve the global payment market; (2) decentralized stablecoins will enhance censorship resistance and DeFi embedding, becoming the base currency on-chain; (3) protocol-native stablecoins will serve as autonomous monetary units within vertical financial ecosystems, supporting the growth and stability of specific on-chain systems. These three are not mutually exclusive but may coexist in the long term, forming a dynamic structure of mutual penetration, collaboration, and competition.

Ultimately, the future of stablecoins will not be determined solely by a specific anchoring method but will depend on three core factors: whether they can be integrated into a new financial system, whether they possess global settlement capabilities, and whether they can maintain transparency and resilience under regulatory pressure. This is not just a currency competition in the crypto world but a battle for reshaping the financial architecture in the global digital age. In this battle, stablecoins are both strategic resources and foundational stones for the new order.

V. Investment and Risk: Who Will Win the Next Phase of the Stablecoin War?

Stablecoins have gradually evolved from being a crypto safe haven to the infrastructure of the on-chain financial system, with their importance in market capitalization, use cases, financial embedding, and even national policy rapidly increasing. However, as their influence expands, a "stablecoin war" is quietly unfolding. In the future, who will dominate this market will no longer be merely a competition of technology, capital, and market share, but a multidimensional, multilayered systemic competition. From an investor's perspective, we need to consider: who can emerge victorious in the next phase of stablecoins? Who might expose risks and exit early amidst seemingly prosperous growth?

Currently, the stablecoin investment track can be divided into four main categories: (1) traditional centralized stablecoin issuers, such as Tether and Circle; (2) emerging compliant stablecoin issuance platforms, such as Paxos, First Digital, and Monerium; (3) DeFi protocol-driven stablecoins, such as MakerDAO, Ethena, and Curve; (4) chain-native or L2 ecosystem stablecoins, such as Aave GHO, zkSync nUSD, and potential EigenLayer stablecoins.

In the traditional track, Tether (USDT) is undoubtedly the current leader. With strong market liquidity, a retail user base in Southeast Asia and Latin America, and high adaptability to gray financial scenarios, USDT's market cap continues to rise, even growing against the trend during the Federal Reserve's interest rate hike cycle. However, its investment value is limited by low transparency in information disclosure, strong reliance on the banking system, and a legal framework that hovers in a gray area. From an investment perspective, Tether is a "cash cow" type of enterprise, but its growth ceiling is evident, facing long-term systemic risks from compliance and regulatory policy changes.

In contrast, Circle behind USDC is taking the "regular army route," closely collaborating with U.S. regulatory agencies and attempting to build a multi-chain issuance mechanism (USDC has been natively issued on over ten chains). If it can enhance the circulation of tokenized assets through public offerings and introduce RWA revenue sharing, it will have a stronger compliance moat. However, USDC lacks the gray channel advantages in overseas markets, and its usage in DeFi is gradually being suppressed by USDT and DAI, leaving its future ability to break through compliance barriers and enter "real use" scenarios still to be verified.

What is truly worth noting is the new forces of DeFi-driven stablecoins. Represented by Ethena's USDe, they have shifted away from traditional stablecoin reliance on fiat reserves towards on-chain yield models and algorithmic financial architectures. The popularity of USDe is not coincidental; it represents a new stable paradigm of "yield support + algorithmic anchoring + derivative arbitrage." These projects possess high scalability and composability, and once validated by the market, they are likely to build a complete financial ecosystem centered around stablecoins, yield trading, liquidity mining, and re-staking.

However, they also carry three major risks:

Yield-driven stablecoins may have hidden Ponzi structure risks. If the yield side (such as shorting ETH perpetual contracts) encounters extreme market conditions or liquidity breaks, it could lead to price decoupling or liquidation runs, resulting in the risk of "algorithmic stablecoin 2.0 collapse."

The complexity of mechanisms increases systemic opacity. Such new models often require users to have high trust in their automated liquidation and rebalancing mechanisms, but in extreme market conditions, on-chain congestion, oracle failures, or insufficient DEX depth could become blind spots for stabilization mechanisms.

High regulatory uncertainty. These stablecoins often circumvent traditional fiat custody systems, making it easy for regulators to classify them as "securities" or "unauthorized currency issuance," leading to crackdowns or interface freezes (such as delisting from centralized exchanges or banning bridging protocols).

In terms of protocol-native stablecoins, such as crvUSD, GHO, and sDAI, they are in the "ecosystem coupling-driven" phase, with investment opportunities arising from capturing protocol growth dividends through "binding governance tokens." For example, users holding CRV or AAVE can influence key parameters such as usage scenarios, liquidity incentives, and fee distributions for their native stablecoins through voting, making stablecoin issuance no longer just a circulation tool but a core anchor point for protocol governance rights and financial revenue rights. This model provides investors with a clearer path for value capture and may shift the valuation focus of native tokens from "pure fees" to "on-chain currency dividends."

However, the limitation of protocol-native tokens lies in their growth being heavily reliant on the market position, risk management capabilities, and community activity of the parent protocol, which in extreme cases could lead to a risk loop of "protocol decline—stablecoin liquidity exhaustion."

In the long run, who can win the stablecoin war will depend on five core capabilities:

A robust anchoring mechanism (whether traditional fiat reserves, on-chain asset hedging, or composite structures) is the technical foundation for the long-term survival of stablecoins;

User penetration capability, i.e., whether they can be widely applied in real scenarios such as exchanges, payments, lending, cross-chain, and settlements, avoiding becoming "empty circulation tokens";

Policy compliance capability and regulatory connection paths, especially in financial strongholds like Europe, Southeast Asia, and the Middle East, which determine their growth limits;

The collaborative relationship with on-chain ecosystems, particularly the degree of nesting with DeFi protocols and support for native liquidity;

Sustainable value capture logic, whether they can provide long-term confidence to holders through governance, revenue distribution, and token economic structures.

Stablecoins are not "decentralized dollars" but bridge assets in the process of reshaping the global monetary architecture. They must navigate the crossroads of regulation, liquidity, and trust while traversing the rapids of market volatility and technological evolution. In the future, the stablecoin war will not produce a single winner but rather multiple breakthroughs across different models, ecosystems, and user scenarios in a multipolar landscape. What truly deserves investors' attention are those projects that can navigate regulatory storms, build on-chain monetary systems, and ultimately connect the real economy with virtual finance—these will be the "sovereign assets" of the crypto world.

VI. Conclusion: Stablecoins are the "Sovereign Anchor" of On-Chain Finance

Stablecoins are not speculative assets but the core operating mechanism of the entire on-chain economy. They are the dollar blood of DeFi systems, the energy of Web3 payments, and the safety belt for emerging countries hedging against currency depreciation. In the next five years, stablecoins will no longer be "auxiliary roles" in the crypto market but will become key components of the new order of digital capitalism. This moment marks the beginning of a systematic layout for the stablecoin track, not the end.