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The stablecoin sector is heading toward a "hundred-coin battle royale." After intense competition, USDT will remain the offshore leader and USDC the regulated leader, but a long tail of mid- to small-cap stablecoins will persist.
These fall into two categories:
Regulated stablecoins issued by Web2 companies
Decentralized stablecoins built by Web3 projects
Beyond USDC and USDT, localized leaders will emerge—like a Hong Kong dollar-pegged stablecoin or e-commerce-native stablecoins (e.g., JD Coin). These fill gaps where giants can’t reach, embedding deeply with local businesses or niche use cases.
Why governments back local stablecoins:
Prevent capital flight and dollar dominance by anchoring funds to domestic financial systems.
Survival lessons from crypto exchanges:
Mid-tier exchanges thrive by:
Specializing in altcoins and obscure trading pairs (serving specific needs).
Dominating underserved regions (capturing niche markets).
Similarly, smaller stablecoins will carve out space despite giant competition.
Recent U.S. and Hong Kong stablecoin regulations ban interest payments to users, aiming to keep stablecoins as pure payment tools—not bank deposit competitors.
But demand for yield persists:
Corporations and whales holding reserves want safe, yield-bearing alternatives. USDT/USDC offer zero yield, while issuers like Tether and Circle profit from reinvesting reserves.
Web3’s workaround:
Decentralized stablecoins can bundle CeFi/DeFi yield products, offering returns while skirting regulations. Examples:
Delta-neutral stablecoins like Ethena’s USDe or Bitcoin-based BitFi:
Projects hold 1 ETH while shorting equivalent ETH futures, creating price stability.
Users earn funding rate income from perpetual contracts.
With security and yield, these decentralized options gain strong appeal.
The stablecoin market resembles an iceberg:
Visible tip (regulated): USDC dominates, alongside regional compliant stablecoins.
Subsurface (offshore): USDT reigns, larger than the visible market.
Deep waters (niches): A thriving ecosystem of specialized and yield-bearing stablecoins exists beyond the giants’ reach.
The future is pluralistic—no one stablecoin will "win," but each will find its niche.
