The development of blockchain technology and the crypto market has spawned a technology product with an intermediary nature, such as stablecoins. After a decade of evolution, the global market circulation of stablecoins has reached nearly $180 billion. When analyzing the current market structure in depth, several characteristics of stablecoins have become increasingly prominent:
Dominant US dollar stablecoins: US dollar stablecoins account for more than 95% of the market, while other stablecoins are smaller in scale. US dollar stablecoins are the settlement currency in digital asset transactions and other major application scenarios. Despite the growing global interest in and adoption of blockchain technology and digital currencies, the US dollar remains the mainstay of the stablecoin market.
Sovereign currency collateral is the mainstream: In the stablecoin market, the largest type of stablecoin is still centralized stablecoins with sovereign currencies as collateral. In contrast, various algorithmic stablecoins, although providing a variety of innovative models, have not been widely used. This means that the main use of stablecoins is still as a transaction intermediary, and it is the deposit and withdrawal channel of sovereign currencies in the crypto market. Its main use scenario is still cryptocurrency trading and OTC payment.
The market is highly concentrated: The stablecoin market is highly concentrated, with USDT alone accounting for more than 60% of the market share, and the top two stablecoins accounting for almost 90% of the market share. It can be said that the stablecoin industry is still in its early stages. Excessive concentration exposes the fragility of the market, but it also shows that new entrants still have many opportunities and space to play an innovative role.
The issuance location is concentrated and disconnected from the user market: Most stablecoin issuers are in the United States, and the issuance of stablecoins in other jurisdictions is relatively limited. However, from the perspective of the distribution of users, Asia and other emerging markets account for a large proportion. This mismatch between the issuance location and the application market will cause many problems as the stablecoin market scale expands.
Limited use: Stablecoins are mainly used for on-site and off-site transactions in the cryptocurrency market. There are few payment-related use scenarios and use cases. On the one hand, this is because many infrastructures need to be improved and user channels need to be further opened up. On the other hand, the narrow dissemination range of stablecoins, overly concentrated distribution channels, and insufficient user education are also the reasons why the stablecoin market is still relatively limited.
Exponential growth of stablecoins is inevitable
The market size of cryptocurrency itself has gradually expanded with cyclical market fluctuations, and the infrastructure and overall ecology in the blockchain field are also gradually improving. With the continuous enrichment of product forms, the continuous expansion of application scenarios, and the increase in deposit and withdrawal channels, stablecoins are expected to usher in exponential growth and explosion in the next 10 years.
10 trillion US dollars: The circulation scale of stablecoins will grow to 10 trillion US dollars. Looking back at the popularity of mobile payments, it is not difficult to find that as infrastructure and technical carriers transform from ideals to reality, the large-scale popularization of payment products with clear needs will exceed the expectations of most people.
Flourishing ecosystem: The application ecosystem of stablecoins will be very prosperous. In addition to the issuers of stablecoins, digital banks, digital wallets, liquidity providers, over-the-counter traders, financial management platforms, lending platforms, etc. will all be very important participants in the ecosystem.
Reduced market concentration: The concentration of stablecoins will be greatly reduced. Due to the dispersion of regional services and application scenarios, the concentration of stablecoins will be dispersed from 1-2 to 5-10. The combined market share of the top 5 companies is expected to exceed 50%, and the top 10 companies will account for more than 75%.
Dispersed application scenarios: The application scenarios of stablecoins will be greatly dispersed. In addition to on-exchange and over-the-counter transactions, stablecoins will be used more for cross-border payments and daily payments. There are many payment scenarios that need to be explored by stablecoins, and the realization of these scenarios is also worth looking forward to.
In today's turbulent market, stablecoins are not just assets stored on the blockchain - they are the gateway to new wealth opportunities. As an emerging financial instrument, the transaction convenience and indispensability of stablecoins in the crypto market, the efficiency and extreme cost-effectiveness in the field of cross-border payments, the security improvement brought by technological progress, and the diversified application prospects in financial innovation all indicate its core position in the future digital economy, which should attract the attention of global investors and financial institutions.
WSPN has identified the key issues in the current stablecoin ecosystem and proposed the concept of Stablecoin 2.0, introducing solutions to these issues (https://www.jinse.cn/blockchain/3694352.html). Standing at the crossroads of Web2 and Web3, stablecoins inherit the stability and reliability of the traditional financial system and integrate the transparency, decentralization and innovation potential of blockchain technology. As a bridge connecting the traditional economy and the digital economy, they provide users with a tool that is both familiar and full of possibilities. As the existing problems of stablecoins are solved and the ecosystem evolves and upgrades, they will shape the future of digital payments and redefine the financial landscape.
For more information, please visit:
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