The regulatory framework for stablecoins has become clear, triggering a new wave of market competition.

Stablecoins are a type of digital token that is pegged to the price of fiat currency (usually the US dollar) and essentially consists of a series of standardized smart contracts. They are neither fiat currency nor are they the same as central bank digital currency (CBDC).

The Trump administration has a friendly attitude towards stablecoins, believing that they help reinforce the dollar's dominance. In contrast, they oppose CBDCs, arguing that it could strengthen government power and undermine individual freedoms. In contrast, the EU and China support CBDCs but have a stricter regulatory stance on stablecoins.

With the gradual clarification of the stablecoin regulatory framework in the United States, the stablecoin network will deeply integrate into the existing dollar system. This will trigger unprecedented fierce market competition in the stablecoin sector. Several well-known financial institutions have already started to enter this field.

The main functions of stablecoins include value storage, medium of exchange, and payment. These functions mainly stem from the fiat currencies they are pegged to. However, the rapid confirmation and programmable features of stablecoins make their efficiency in cross-border circulation and clearing settlement far superior to the traditional SWIFT system. Currently, the annual settlement total of stablecoins is already double that of the Visa payment network.

In the first wave of stablecoins from 2018 to 2019, project teams primarily focused on licenses and asset sides, neglecting liquidity network effects and user experience, which led to the failure of most projects. In the upcoming second wave, as the regulatory framework is about to be clarified, project teams will pay more attention to asset scale, liquidity network effects, and user experience.

In addition to the stablecoin projects launched by some large financial institutions, a large number of emerging stablecoin projects are expected to appear.

For ordinary investors, this wave of stablecoins mainly offers two investment opportunities: one is to participate in yield farming of decentralized CDP stablecoin protocols, and the other is to pay attention to stablecoin infrastructure projects. The latter is relatively more suitable for ordinary investors.

Stablecoin infrastructure projects are mainly divided into two categories: one type provides liquidity support, while the other develops new application scenarios for stablecoins. These projects provide important support for the development of the stablecoin ecosystem.