Stablecoin research report: Deep competition between market, technology and sovereignty

As of May 26, 2025, the total market value of global stablecoins has climbed to approximately US$246.382 billion (approximately RMB 2.46 trillion), an increase of approximately 4927.64% from approximately US$5 billion in 2019, showing an explosive growth trend. This trend not only highlights the rapid expansion of stablecoins in the cryptocurrency ecosystem, but also highlights its increasingly irreplaceable position in payment, trading, and decentralized finance (DeFi).

In 2025, the stablecoin market continued to grow rapidly, up 78.02% from the market value of US$138.4 billion in 2023, and currently accounts for 7.04% of the total market value of cryptocurrencies, further consolidating its core position in the market.

The following table shows the annual data and growth of stablecoin market capitalization from 2019 to 2025:

Trend Insights:

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

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

2024-2025: Market capitalization rebounds strongly, increasing by 78.02%, reflecting increased institutional participation and continued expansion of DeFi applications.

Macro-financial environment:

Against the backdrop of increasing global inflationary pressure and financial market turmoil, investors' demand for "on-chain cash" has increased significantly. The U.S. Treasury Department has defined stablecoins as "on-chain cash", providing policy logic support for its absorption of traditional capital. At the same time, when crypto assets fluctuate violently, stablecoins are also seen as a safe haven.

Technological progress and cost advantages:

Some efficient public chains, represented by Tron, have significantly reduced transaction costs. USDT transfers on the Tron chain have almost zero fees, attracting a large number of trading users. High-throughput blockchains such as Solana also help expand the use of stablecoins due to their high speed and low fees.

Institutional adoption enhancements:

In 2024, BlackRock issued the BUIDL tokenized fund based on USDC settlement, which will be used to explore the on-chain of assets such as bonds and real estate, highlighting the importance of stablecoins in institutional-level settlement. According to OKG Research, under the optimistic scenario of the gradual rollout of the global compliance framework and widespread adoption by institutions and individuals, the global stablecoin market supply will reach 3 trillion US dollars in 2030, with monthly on-chain transaction volume reaching 9 trillion US dollars, and the annual transaction volume may exceed 100 trillion US dollars. This means that stablecoins will not only be on par with traditional electronic payment systems, but will also occupy a structural foundation 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, and become an important medium for digital payments and asset circulation.

DeFi demand pull:

Citibank pointed out that stablecoins are the "main entrance" of DeFi, and their low volatility makes them the first choice for value storage and transactions. The Chainalysis report shows that stablecoins account for more than two-thirds of on-chain transactions and are widely used in lending, DEX liquidity provision and mining. In 2024, the TVL (locked volume) of leading DeFi protocols such as Uniswap and Aave increased by about 30%, with USDC andDAI as the main trading pairs. After the 2024 US election, the market value of stablecoins increased by US$25 billion, further verifying its core role in the DeFi scenario.

Currently, the stablecoin market is highly concentrated, with Tether (USDT) having a market value of $150.335 billion, accounting for 61.27%; USD Coin (USDC) having a market value of $60.822 billion, accounting for 24.79%. The combined market share of the two is as high as 86.06%, forming a duopoly.

Despite this, emerging stablecoins are gradually rising and challenging the dominant position. For example, the USDE launched by Ethena Labs has grown from US$146 million at the beginning of 2024 to US$4.889 billion, an increase of more than 334 times, becoming the fastest growing stablecoin. In addition, USD1 (US$2.133 billion) and USD0 (US$641 million) also showed a good market expansion trend, but it is not enough to shake the dominance of USDT and USDC in the short term.

The following is the market capitalization ranking of the world's top 20 stablecoins, data from (5.16) CoinGecko:

Market competition mainly takes place between three types of stablecoins:

Fiat-collateralized stablecoins: USDT and USDC are backed by USD reserves and have an advantage over centralized exchanges and traditional finance with transparency and compliance (such as USDC's monthly audits). For example, USDT added $30 billion in market value in 2024, demonstrating its market trust.

Decentralized stablecoins: USDE became a popular trading pair on Uniswap in 2024 through its synthetic dollar mechanism and native yield model. Its locked volume increased by 50% (DefiLlama), and it quickly rose in the DeFi ecosystem. DAI relied on MakerDAO's decentralized governance to attract DeFi users, but its scale was relatively small, at only US$3.631 billion.

Emerging stablecoins: USD1 has rapidly expanded to US$2.133 billion through institutional endorsements (such as Binance investment); USD0 attracts users with DeFi incentive mechanisms, with a market value of US$641 million.

Others: The collapse of TerraUSD (UST) in 2022 led to a crisis of trust in algorithmic stablecoins, prompting the market to lean towards more transparent fiat-collateralized stablecoins. As a result, USDC's market share increased by approximately 10% between 2023 and 2024.

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

Innovative revenue mechanism

USDE provides high returns to holders through the "Internet Bond" function, which comes from the staking income of stETH and the difference in funding rates 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 environment, where traditional financial products are difficult to provide similar returns.

Deep integration of DeFi ecosystem

USDE's wide support on DeFi platforms (such as Uniswap, Curve) 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. DefiLlama data shows that the amount of USDE locked on Uniswap has increased by 50%, reflecting its important position in the DeFi ecosystem.

Decentralization and censorship resistance

As a stablecoin based entirely on crypto assets, USDE does not rely on the traditional financial system, which is significantly attractive to users who seek decentralization, especially in some regions where traditional financial services are limited or restricted.

Growth in market demand

As the DeFi and cryptocurrency ecosystems expand, the demand for stablecoins continues to increase. As an innovative, fully decentralized stablecoin, USDE meets the market's demand for new stablecoin solutions.

Institutional support and collaboration

Ethena Labs' collaboration with well-known crypto investment institutions (such as DragonFly Capital, Delphi Ventures) and exchanges (such as Binance) has enhanced the market confidence and liquidity of USDE.

Marketing and Community Engagement

Ethena Labs quickly attracted the attention of users and developers and promoted the adoption of USDE through effective marketing strategies and community incentive programs (such as the airdrop of the governance token ENA).

USD1: USD1, issued by World Liberty Financial (WLFI), has a market value of US$2.133 billion and ranks 7th. Its market value soared from US$128 million to US$2.133 billion in just one week, with a rapid growth momentum.

WLFI is associated with the Trump family and received $200 million in investment from Binance and MGX, which strengthened its institutional endorsement. The New Money report pointed out that USD1 was selected as the settlement currency for major transactions, such as the Pakistani government cooperation project, further enhancing its market influence.

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

USD0: USD0 issued by Usual platform has a market value of 641 million US dollars and ranks 12th. According to Usual Blog, it attracts users through the USUAL token incentive mechanism, allowing holders to participate in governance and share platform profits.

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

USD0's unique positioning in the DeFi ecosystem brings it growth potential, but market awareness and liquidity need to be improved.

Emerging stablecoins challenge the market through differentiated strategies (such as institutional endorsement or DeFi incentives), but it is difficult to shake the dominant position of USDT and USDC in the short term.

This section systematically analyzes and compares the top five mainstream stablecoins (USDT, USDC, DAI, USDE, USD1) in terms of mechanism structure, asset support type, liquidity and application scenarios, and risk points.

Mainstream stablecoins such as USDT and USDC have sufficient liquidity, and have deep trading pairs on most mainstream exchanges (Coinbase, Binance, OKX, etc.) and decentralized trading platforms. They cover almost all major public chains: USDT/USDC can be traded on Ethereum, Tron, Solana, BSC, Polygon and other chains; while emerging stablecoins (such as USD1, FDUSD) are mainly launched on specific public chains (such as Tron, Solana, etc.) and some centralized exchanges in the early stage. The Tron network recently introduced zero handling fees for USDT, further increasing the transaction volume and liquidity of USDT on the 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 is a key factor in assessing the credibility of stablecoins. The following is a detailed analysis of the reserve transparency of various stablecoins:

USDT (Tether):

• Reserve status: Claimed to be backed by cash, bank deposits, short-term Treasury bills and other assets.

• Transparency: Reserve reports are published every quarter, but have long been questioned, with some reports showing a complex reserve structure and some assets difficult to verify. For example, in 2023, Tether was accused of including commercial paper in its reserves, which caused market concerns.

• Risks: Historically, it has been the subject of regulatory investigations for reserve transparency issues, such as the 2021 investigation by the New York Attorney General’s Office.

USDC (USD Coin):

• Reserve status: Backed by cash and short-term U.S. Treasury bonds, reserve assets are held at regulated financial institutions such as JPMorgan Chase and Citigroup.

• Transparency: Monthly reserve reports audited by Grant Thornton are published, which provide high transparency and market trust. For example, the May 2025 report shows that total reserves exceed $60 billion, all in cash and Treasury bonds.

• Risks: Dependence on the traditional financial system and impacted by macroeconomic and regulatory policies.

USDE (Ethena USDe):

• Reserve status: Synthetic USD, based on stETH (staked Ethereum) as collateral, and value maintained through delta-neutral hedging strategies across DeFi protocols.

• Transparency: It is completely based on blockchain, with transparent reserves and mechanisms, which can be verified by users on DeFi platforms such as Uniswap and Curve. For example, in May 2025, the collateral assets of USDE were made public on the chain, showing that the stETH collateral ratio exceeded 150%.

• Risk: Dependent on the stability of the DeFi ecosystem, market fluctuations may affect its value.

DAI (MakerDAO):

• Reserve status: Collateralized by a variety of crypto assets (such as ETH, USDC) to support decentralized governance. The current collateral ratio is usually maintained above 150%.

• Transparency: All collateral assets and collateral ratios are publicly available on the MakerDAO dashboard and can be viewed in real time. For example, in May 2025, ETH collateral accounted for about 60% and USDC accounted for 30%.

• Risks: Depends on the price stability of crypto assets and has historically faced liquidation risks due to ETH price fluctuations, such as the “black swan” event in June 2022.

USD1 (World Liberty Financial):

• Reserve status: It is reportedly backed by assets such as U.S. Treasury bonds and cash, but the specific details are not disclosed and you need to pay attention to its official white paper.

• Transparency: As an emerging stablecoin, it has not yet established a long-term record of trust, and no formal reserve report has been released as of May 2025.

• Risks: Being associated with the Trump family, there may be political and regulatory risks, such as a potential investigation by the US SEC.

Summarize:

• USDC and DAI perform best in reserve transparency, ensuring trust through monthly audits and blockchain public data, respectively.

• USDT has poor transparency and has long been controversial, so be vigilant.

• The transparency of USDE relies on the DeFi ecosystem and is suitable for technical users.

Common indicators for measuring the activity of stablecoin chains include:

• Number of active addresses: The number of independent addresses that have at least one transaction (send or receive) during the statistical period. Number of transfers (transaction volume): The total number of all stablecoin transactions during the statistical period, which can reflect the transaction frequency. Average holding time: The average life cycle of an address holding a specific stablecoin (usually calculated through the on-chain UTXO model or snapshot analysis), which is used to evaluate the status of fund precipitation.

• These indicators can comprehensively reflect the breadth of use and circulation speed of stablecoins on the chain.

Stablecoins are the "bridge assets" of the multi-chain ecosystem, and their activity directly reflects the payment capabilities, liquidity, and real user usage of each chain. Currently, the issuance of stablecoins is mainly concentrated on top assets such as USDT (Tether), USDC (Circle), DAI (MakerDAO), and the emerging USDE (Ethena). The following is based on public chain data, focusing on the four mainstream public chains of Ethereum, TRON, Solana, and BSC, and comparing key indicators such as active addresses, number of transactions, single transaction amount, and user stickiness (retention rate) of stablecoins in the past 30 days:

Note: USDE mainly runs on Ethereum, DAI is mainly used for DeFi lock-up, and cross-chain activity is relatively low.

1. TRON: Stablecoin payment home, USDT dominates

• Advantages: Low transaction fees + high concurrency performance make TRON the first choice for USDT payments in Southeast Asia and Latin America.

• Activity: Monthly active addresses reached 76.64 million, monthly transactions exceeded 64 million, and transaction volume exceeded US$600 billion, leading all chains.

• High stickiness: DAU exceeds one million, and the MAU/DAU ratio is as high as 76, indicating that most users are low-frequency "payment type" accounts.

2. Ethereum: High-net-worth users gather, and the transaction amount is far ahead

• USDC/USDT split the world equally: USDC's monthly trading volume reached 539.1 billion US dollars, and USDT's was 280.9 billion US dollars.

• High average transaction volume: USDC single transaction reached 86,000 US dollars, and USDT also reached 38,000 US dollars, which is much higher than other chains.

• Disadvantages: Gas costs are high, and retail investors turn to Layer2 or low-fee chains such as TRON and BSC.

3.Solana: Stablecoin transaction volume rises rapidly

• USDC dominates: 171 million transactions per month and nearly 7 million active addresses.

• USDT transactions are also increasing, showing a trend of large volume but small amount.

• Ecosystem-driven: DEX ecosystems such as Jupiter and Phoenix give rise to high-frequency trading scenarios.

4. BSC: USDT and USDC transactions are equally important, with a large number of active users

• Broad user base: active addresses reached 9.4 million (USDT) and 2.4 million (USDC).

• Transactions are frequent but the amount is low: a single transaction is about US$1,000, which is more suitable for retail investors.

• Dependence on CEX/Binance: The activity of on-chain stablecoins mostly depends on the import of Binance ecosystem traffic.

It can be seen that USDT is still the absolute main force, especially in TRON and BSC, which are widely used for cross-border payments and OTC clearing. USDC has performed strongly in high-net-worth transfers and Solana ecosystem DeFi, and is widely used by institutions and developers. Other new stablecoins such as USDE are growing rapidly. Although they are not active at present, they are attracting market attention due to the "yield stablecoin" model. In addition, Solana is growing the fastest, and the use of stablecoins is expected to be on par with BSC within the year, gradually eroding its market share.

The policies of major economies around the world on stablecoins are becoming increasingly clear, and while the supervision is becoming stricter, it also sends a signal of encouraging innovation. Regions represented by the United States, Hong Kong, and Dubai are building their position in the stablecoin industry chain through different paths.

(1) Trump and USD1: The rise of the politicization of stablecoins

In March 2025, World Liberty Financial (WLFI), supported by Trump, launched the USD1 stablecoin. The market value of the coin soared from US$128 million to US$2.133 billion in just one week, becoming the seventh largest stablecoin in the world. The Trump family holds 60% of WLFI's shares, sparking widespread discussion about conflicts of interest and regulatory fairness. Critics worry that this interweaving of politics and finance may affect market stability and regulatory transparency.

(2) GENIUS Act: A federal framework for stablecoin regulation

In May 2025, the U.S. Senate passed the United States Stablecoin National Innovation and Uniform Guidance Act (GENIUS Act) by 66 votes to 32. The bill aims to establish a national unified regulatory framework for stablecoins, requiring issuers to:

• Hold 1:1 cash or short-term Treasury reserves;

• be approved by federal or state regulators;

• Comply with anti-money laundering and consumer protection regulations.

In addition, the bill prohibits the issuance of algorithmic stablecoins to prevent events similar to the Terra/Luna crash from happening again.

(3) Policy shift and market impact

The GENIUS Act marks a clearer regulation, which is expected to promote compliance innovation and consolidate the dominance of the US dollar. Institutions such as Circle have benefited significantly. However, the loosening of regulation is mixed with political games. The future policy direction of stablecoins is still affected by the election cycle, and long-term uncertainty remains.

On May 21, 2025, the Hong Kong Legislative Council formally passed the Stablecoin Ordinance, establishing a statutory regulatory framework for the issuance of stablecoins. According to the Ordinance, any stablecoin issued in Hong Kong or anchored to the Hong Kong dollar must obtain permission from the Hong Kong Monetary Authority (HKMA).

• Regulatory content: covers custody of reserve assets, audit mechanisms, financial transparency, etc. The HKMA has established a registration form for licensed issuers, which is open to the public.

• High degree of openness: It not only supports Hong Kong dollar stablecoins, but also allows projects pegged to other fiat currencies such as the US dollar and the euro, reflecting a friendly attitude towards global projects.

(1) Sandbox mechanism and market appeal

HKMA also launched a regulatory sandbox mechanism, allowing projects to test business models in a controlled environment. As of early 2025, more than 20 companies including Circle and Paxos have entered the sandbox stage. Local case: Qredo and HKMA jointly piloted the Hong Kong dollar stablecoin for cross-border trade settlement.

Market feedback: According to Sidley Austin data, the Hong Kong stablecoin market will grow by about 15% in 2024, with institutional users becoming the core driving force.

(2) Regional radiation power is enhanced

Hong Kong's compliance mechanism has attracted crypto-financial projects from Southeast Asia, Japan and South Korea, and its regulatory model is gradually becoming an object of imitation for Asia-Pacific countries. In 2025, the Hong Kong dollar stablecoin is expected to expand to multiple "Belt and Road" cross-border settlement scenarios.

Dubai Virtual Asset Regulatory Authority (VARA) is the first in the world to implement stablecoin classification supervision, which is divided into two categories:

• Category 1: For large-scale issuers, which must meet high-standard reserve management and audit requirements;

• Category 2: Provides a flexible regulatory path for small, medium or experimental projects.

The UAE Central Bank approved the dirham-pegged stablecoin framework in 2024, marking the official launch of Dubai’s development strategy to support local currency stablecoins.

(1) Market performance and application scenarios

The Chainalysis report shows that as of mid-2024, stablecoins account for 52% of crypto transactions in the UAE, far exceeding BTC (20%) and ETH (15%). 78% of stablecoin capital flows come from CEX platforms, reflecting their dominant position in payments, remittances and transaction settlements.

Major projects: In 2025, Abu Dhabi’s three major consortiums (ADQ, First Abu Dhabi Bank, and IHC) jointly launched the local currency stablecoin "AE Coin", with a target market value of US$1 billion, which will be used for local payments and cross-border settlements.

(2) Regulatory Outlook

VARA expects to release more operational stablecoin guidelines covering KYC, AML and consumer protection by the end of 2025. The UAE Central Bank is also working with the IMF to promote the alignment of regulation with international standards and enhance market predictability.

As a key infrastructure that connects real-world assets with crypto-world transactions, the future development trend of stablecoins is driven not only by regulatory policies, but also by the evolution of technology paths and application scenarios. The following will make a judgment on the development direction of stablecoins in the next three to five years from four dimensions: technology evolution, competition landscape, application expansion, and narrative transformation.

The technical form of stablecoins will no longer be limited to the "on-chain IOU" model, but will evolve towards a more basic native chain clearing and settlement tool:

Judgment: In the long run, stablecoins will gradually get rid of their identity as "bank asset mapping objects", evolve into trusted settlement units on the chain, and become an important value anchoring layer for L2/L3 economies.

The competition among stablecoins will move away from the competition of market value and circulation to multi-dimensional structural competition:

Judgment: The core of future stablecoin competition is not "whose dollar is the most stable", but who can become the "preferred liquidation asset" and "payment entrance" for DeFi protocols and on-chain economies.

With the rise of AI Agent, RWA mapping, and on-chain settlement accounts, the stablecoin narrative is also upgrading:

From "trading pairs" to "liquidity engines": stablecoins are replacing ETH/BTC to become the absolute axis of the liquidity pool; projects like Ethena USD and USD0 emphasize "internal production capacity and system control" and will become the new generation of DeFi "underlying currency".

Deeper binding with RWA: In the future, stablecoins will not only map T-Bills, but will also be deeply integrated with on-chain government bonds, on-chain credit bonds, and on-chain commercial papers; Circle, Ondo, and Matrixdock are promoting the "on-chain bonds + stablecoins" dual-wheel model.

"Settlement bottom layer" in the on-chain account system: After the rise of Account Abstraction, MPC wallets, and Layer 2 payment networks, stablecoins will become the default assets of AI Agent payment accounts; for example: Agent accepts a task → automatically requests stablecoins → completes the task → stablecoin settlement → AI continues execution, and stablecoins become "agent-native currency."

Stablecoins have evolved from early trading media to the liquidity cornerstone and value anchoring core of the entire crypto economy. Whether it is mainstream centralized stablecoins (USDT, USDC), decentralized stablecoins (DAI, LUSD), or AI-driven synthetic coins with structural innovations (USDE, USD0), they are constantly exploring the balance between stability, security and scalability.

The development of stablecoins not only reflects the technological innovation and institutional evolution of Web3, but is also becoming part of the digitalization of the global monetary system. In the future, stablecoins will no longer be "encrypted dollars", but a bridge in the multi-center financial world and a carrier of credit and autonomy experiments.