First, the stablecoin track will see a "hundred-coin battle" in the future. After fierce competition, USDT will still be the offshore stablecoin leader, USDC will still be the compliant stablecoin leader, but a large wave of mid-to-long-tail stablecoins will remain.
These mid-to-long-tail stablecoins are mainly two types: compliant stablecoins made by Web2 companies and decentralized stablecoins made by Web3 companies.
1. Still Optimistic about Stablecoins Made by Web2 Companies
In different countries and regions, and different business scenarios, many local "local snakes" will emerge as regional leaders, such as Hong Kong's Hong Kong dollar stablecoin and JD.com's e-commerce stablecoin.
These are places that USDC and USDT might not reach, and these niche scenario stablecoins can integrate more deeply with local enterprises or their own businesses.
From a political perspective, each country and region wants to prevent capital outflow and being sucked by the US dollar, so they will promote local fiat currency stablecoins to keep funds circulating within their own financial system through compliant means.
It can actually be compared to the existing exchange landscape: besides a few absolute leading exchanges, there are also many mid-to-long-tail exchanges.
How do these mid-to-long-tail exchanges survive?
They primarily adopt two strategies:
First, focusing on Altcoins and niche trading pairs, which means binding to different business scenarios;
Second, focusing on niche countries or regions, that is, capturing segmented markets;
Therefore, even with pressure from leading players, mid-to-long-tail stablecoins still have room for survival.
2. Still Optimistic about Decentralized Stablecoins by Web3 Companies
The current US stablecoin bill has a provision that prohibits stablecoin companies from paying interest to users.
Hong Kong's stablecoin consultation draft also has a similar provision.
The purpose of this rule is actually to make stablecoins truly become a payment tool, rather than competing with bank deposits through investment returns.
However, the market has a very strong demand for "interest-bearing stablecoins", such as enterprises or large holders with substantial reserve funds who still hope to obtain stable returns under the premise of safety.
If converted to USDT/USDC and left there, there would be no returns, but Tether and Circle have taken the costlessly obtained US dollars for their own financial management and swallowed the profits, which is an opportunity for interest-bearing stablecoins.
Only decentralized stablecoins by Web3 companies can somewhat bypass compliance restrictions, packaging some CeFi and DeFi financial products as stablecoins to provide users with stable or even high returns.
The most typical example in this cycle is the emerging "neutral strategy stablecoins", such as Ethena's USDe and BitFi in the Bitcoin ecosystem.
By using perpetual contracts, if a project holds 1 ETH, it will short the same value of ETH in the perpetual contract market. The result is that regardless of ETH's price fluctuations, the total value remains basically unchanged, achieving "neutrality", and the project can also give users holding stablecoins the income from funding rates.
Once safety is guaranteed and stable returns are provided, these decentralized stablecoins are still very attractive.
Summary
The stablecoin market is very much like an iceberg:
Compliant stablecoins are the part above the sea level, with USDC occupying the majority, and will continue to grow, but there will also be many regional compliant stablecoins;
Offshore stablecoins are the part below the sea level, with USDT occupying the majority, which is much larger than the part above sea level;
But in deeper positions, beyond the reach of USDC and USDT, there will exist a large number of stablecoins, including niche business scenario stablecoins and decentralized interest-bearing stablecoins.
