The New Order of Stablecoins: Market, Technology, and Sovereignty Struggles

Introduction

Stablecoins, as a core component connecting traditional finance and the crypto asset ecosystem, are steadily rising in strategic importance. From the earliest centralized custody models to today's stablecoins issued by protocols themselves and driven by on-chain synthesis and algorithmic mechanisms, the market structure has undergone a fundamental change.

At the same time, the demand for stablecoins from DeFi, RWA, LSD, and even L2 networks is rapidly expanding, further driving 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, on-chain activity, and policy environment of mainstream projects, helping to 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% from around $5 billion in 2019, demonstrating explosive growth. This trend not only highlights the rapid expansion of stablecoins within the cryptocurrency ecosystem but also underscores their increasingly irreplaceable position in payments, transactions, and decentralized finance (DeFi).

In 2025, the stablecoin market continues to experience rapid growth, with a 78.02% increase compared to the market value of 138.4 billion USD in 2023, currently accounting for 7.04% of the total cryptocurrency market value, further solidifying its core market position.

Trend Insights:

2019-2022: The market value of stablecoins surged from $5 billion to $167.9 billion, a 32-fold increase, mainly driven by the explosion of the DeFi ecosystem, increased demand for cross-border payments, and the market's demand for safe-haven assets.

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

2024-2025: Strong market rebound with a growth of 78.02%, reflecting an increase in institutional participation and the continued expansion of DeFi applications.

Recent growth drivers

Macroeconomic Financial Environment:

In the context of increasing global inflation pressure and turmoil in financial markets, the demand for "on-chain cash" has risen significantly among investors. The U.S. Treasury has defined stablecoins as "on-chain cash," providing policy logic support for their absorption of traditional capital. At the same time, during severe fluctuations in crypto assets, stablecoins are also seen as a safe haven.

Technological Advancements and Cost Advantages:

Some efficient public chains represented by Tron have significantly reduced transaction costs, with nearly zero fees for USDT transfers on the Tron chain, attracting a large number of trading users. High-throughput blockchains like Solana have also expanded the use cases for stablecoins due to their high speed and low fees.

Institution Adoption Enhanced:

In 2024, BlackRock will issue a tokenized fund settled in USDC, aimed at exploring on-chain assets such as bonds and real estate, highlighting the importance of stablecoins in institutional-level settlements. According to OKG Research's calculations: in an optimistic scenario where global compliance frameworks are gradually implemented and institutions and individuals widely adopt stablecoins, the global stablecoin market supply is expected to reach $3 trillion by 2030, with monthly on-chain transaction volume reaching $9 trillion and annual transaction volume 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 value, stablecoins will become the "fourth type of base currency asset" after government bonds, cash, and bank deposits, serving as an important medium for digital payments and asset circulation.

DeFi demand pull:

The Chainalysis report shows that stablecoins account for more than two-thirds of the on-chain trading volume, widely used in scenarios such as lending, DEX liquidity provision, and mining. In 2024, the TVL of leading DeFi protocols like Uniswap and Aave is expected to grow by about 30%, with USDC and DAI being the main trading pairs. After the 2024 U.S. elections, the market cap of stablecoins increased by $25 billion, further validating their core role in DeFi scenarios.

Stablecoin Market Structure and Competitive Landscape

Market Concentration and Overall Structure

Currently, the stablecoin market is showing a highly concentrated situation, with Tether(USDT) having a market capitalization of $150.335 billion, accounting for 61.27%; USD Coin(USDC) has a market capitalization of $60.822 billion, accounting for 24.79%. Together, the market share of the two reaches as high as 86.06%, forming a dual oligopoly.

Nevertheless, emerging stablecoins are gradually rising to challenge the dominant position. For example, the USDE launched by Ethena Labs grew from $146 million at the beginning of 2024 to $4.889 billion, an increase of over 334 times, making it the fastest-growing stablecoin. In addition, USD1(21.33 billion ) and USD0(6.41 billion ) also show good market expansion trends, but in the short term, they are still insufficient to shake the dominance of USDT and USDC.

Competitive Landscape Analysis

Market competition mainly unfolds between three types of stablecoins:

Fiat-collateralized stablecoins: USDT and USDC are backed by US dollar reserves, gaining advantages in centralized exchanges and traditional finance due to transparency and compliance. For example, USDT added $30 billion in market capitalization in 2024, demonstrating its market trust.

Decentralized Stablecoin: USDE is expected to become a popular trading pair on a certain DEX in 2024 through a synthetic dollar mechanism and native yield model, with a 50% increase in locked value, rapidly rising in the DeFi ecosystem; while DAI, relying on the decentralized governance of MakerDAO, attracts DeFi users but is smaller in scale, only at 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 capitalization 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 USD stablecoin based on Ethereum, developed by Ethena Labs, which uses stETH 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 for holders through the "internet bond" feature, which comes from the staking rewards of stETH and the funding rate differentials in the perpetual contract market. 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 DeFi Ecosystem

The widespread support for 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 a certain DEX has increased by 50%, reflecting its significant position in the DeFi ecosystem.

Decentralization and anti-censorship features

As a stablecoin that is completely based on crypto assets, USDE does not rely on the traditional financial system, which has significant appeal among users pursuing decentralization, especially in regions where traditional financial services are limited or restricted.

Growth of Market Demand

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 stablecoin solutions.

Institutional Support and Collaboration

Ethena Labs' collaboration with well-known crypto investment institutions and exchanges has strengthened 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.

![Stablecoin New Order: Market, Technology, and Sovereignty Struggle])https://img-cdn.gateio.im/webp-social/moments-3058ee347098ebccd238ca6772f4ff3b.webp###

( The Challenges of Emerging Stablecoins

USD1: Issued by World Liberty Financial)WLFI###, USD1 has a market capitalization of 2.133 billion USD, ranking 7th, with its market value skyrocketing from 128 million USD to 2.133 billion USD in just one week, showing rapid growth.

WLFI is associated with the Trump family and has secured a $200 million investment from a certain CEX and MGX, enhancing institutional backing. The New Money report indicates that USD1 has been chosen as the settlement currency for significant transactions, such as the collaboration project with the Pakistani government, further increasing its market influence.

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

USD0: USD0 issued by the Usual platform, with a market cap of $641 million, ranked 12th. According to 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 enhance market awareness and liquidity.

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

Mainstream Stablecoin Analysis and Comparison

This section systematically analyzes and compares the top five mainstream stablecoins by market capitalization, namely (USDT, USDC, DAI, USDE, and USD1), from the perspectives of mechanism structure, asset support types, liquidity and application scenarios, and risk points.

( 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 and decentralized trading platforms. They almost cover all major public chains: USDT/USDC can be traded on chains such as Ethereum, Tron, Solana, BSC, and Polygon; while emerging stablecoin ) like USD1 and FDUSD### are initially launched mainly on specific public chains and some centralized exchanges. Recently, the Tron network introduced zero fees for USDT, further increasing 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 )Tether###:

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

Transparency: Quarterly reserve reports are published, but have long been questioned, with some reports indicating a complex reserve structure and some assets difficult to verify. For example, in 2023, Tether was accused of including commercial paper in its reserves, raising concerns in the market.

Risk: Historically, there have been multiple regulatory investigations due to issues with reserve transparency, such as the investigation by the New York Attorney General's Office in 2021.

USDC (USD Coin):

Reserve situation: Supported by cash and short-term U.S. Treasury bonds, reserve assets are held in regulated financial institutions such as JPMorgan Chase and Citibank.

Transparency: Monthly reserve reports audited by Grant Thornton are published, ensuring high transparency and strong market trust. For example, the report in May 2025 showed a total reserve of over $60 billion, all in cash and government bonds.

Risk: Dependence on the traditional financial system, influenced by macroeconomic factors and regulatory policies.

USDE (Ethena USDe):

Reserves: Synthetic USD, based on stETH as collateral, and maintained through a delta-neutral hedging strategy via DeFi protocols.