How much profit can the “1:1 printing right” of stablecoins bring?

1. Stablecoins: The "Private Money Printing Machines" of the Digital Age Over the past year, "stablecoins" has been one of the hottest buzzwords in the capital markets. Stablecoins are digital currencies pegged to fiat currencies, theoretically pegged 1:1 to fiat currencies and backed by real assets. This raises the question: if large cross-border e-commerce companies issue stablecoins to reduce transaction costs and save tens of millions of yuan annually, that's reasonable. However, in reality, stablecoins are often issued by blockchain platforms and digital service providers. So, how much profit can this "1:1 money printing power" actually generate? Don't underestimate this business. The global stablecoin market landscape is clear: USDT holds a 60% market share, and USDC holds 25%. Among them, Tether, the issuer of USDT, has caused quite a stir: its average employee salary ranks second globally. Bloomberg also reported that it is considering selling a 3% stake for $15-20 billion, implying a valuation of up to $500 billion, comparable to OpenAI and SpaceX. What makes Tether worth this much? Second, the "Money Printing Logic" of Stablecoins. Traditional banks profit by accepting deposits and lending them out to earn a profit. Stablecoin issuers collect US dollars and mint them into tokens on the blockchain. The money in hand is the source of profit. Circle (issuer of USDC): Its operations are stable. Upon receiving funds, it primarily invests them in low-risk assets such as US Treasury bonds and cash to ensure a 1:1 exchange rate with the US dollar. Tether (USDT issuer): Its model is more radical. It currently holds $100 billion in reserves and earns over $4 billion annually from interest alone. Net profit is projected to reach $13.7 billion in 2024, representing a 99% profit margin. Tether's portfolio includes not only cash and US Treasury bonds, but also Bitcoin and equity investments across payment infrastructure, renewable energy, artificial intelligence, and tokenization. To some extent, Tether no longer resembles a simple stablecoin company, but more like a top investment bank and asset management giant. Third, the "Stablecoin War" of DeFi Protocols Once the "money printing model" became so profitable, it naturally attracted countless imitators. Many DeFi protocols have joined the stablecoin war:

MakerDAO's DAI: One of the earliest successful decentralized stablecoins

• Innovation: It was the first to include US Treasury bonds in its reserves, at one point holding over $1 billion in short-term Treasury bills.

• Revenue Distribution: Excess revenue goes into a surplus buffer, which is then used to repurchase and burn MKR governance tokens. MKR is no longer just a "governance voting right" but is directly linked to cash flow, becoming an "equity token" with real value.

Frax: A Small but Focused "Sophisticated Money Printing Machine"

Frax's overall scale is small, with a circulating supply consistently below $500 million, but its design is extremely sophisticated. Revenue Distribution: A portion is used to destroy FRAX tokens to maintain scarcity; a portion is distributed to stakers to enhance user engagement; the remainder is invested in the sFRAX vault, which tracks the Federal Reserve interest rate, providing users with a product that tracks US Treasury yields. Although its scale is far smaller than Tether, Frax still generates tens of millions of dollars in revenue annually, making it a true example of "small scale, high efficiency." Aave's GHO: An Extension of DeFi Lending Aave, a well-known lending protocol, launched its own stablecoin, GHO, in 2023. Model: When users borrow GHO, the interest they pay goes directly to the Aave DAO, rather than to an external institution. Income Distribution: Approximately $20 million in interest income annually; half is distributed to AAVE token stakers, and the other half remains in the DAO treasury for community governance and development. Currently, the GHO ecosystem is approximately $350 million in size, but its key strategy is to deeply integrate stablecoins with lending, forming a "vertical closed-loop ecosystem." It can be said that each stablecoin protocol is attempting to build its own private money printing press, each displaying its own unique capabilities.

Fourth, Hidden Concerns: Are They Truly Stable?

While stablecoins reduce cross-border transaction costs and improve efficiency, they also harbor numerous hidden dangers:

• The anchored asset is not absolutely stable: Tether's reserves include Bitcoin, and in the event of significant fluctuations, the stablecoin could "break away from its anchor."

• The revenue distribution process is opaque: Many protocols claim that revenue will be used for token buybacks or rewards, but the actual operation is a "black box."

• Hedging strategies carry risks: Using futures hedging models theoretically cannot guarantee 100% security.

Compared with national credit endorsements, the "credibility" of private stablecoins is always limited. 5. Why is Tether valued at $500 billion? Given the numerous risks, why is Tether still valued at $500 billion? The answer lies in: stablecoins have become the infrastructure of the digital age. They are not only payment and settlement tools, but can also be embedded in lending, trading, and RWA (real-world asset tokenization), providing new channels for global capital circulation. Tether's high valuation actually reflects the market's huge expectations for the future of RWA. Of course, the implementation of regulatory compliance remains a key factor in determining the future development of stablecoins. Stablecoins may appear to be just a cornerstone of the digital currency market, but in reality, they represent a new type of "coinage" in the financial system. Whether it's Tether's $500 billion valuation or the flourishing of DeFi protocols, they all remind us that the monetary landscape of the digital age is being quietly rewritten.