Global Finance is quietly undergoing seismic shifts.
The existing system for dollar liquidity, built on Eurodollars and banks, is starting to crack
Here's why stablecoins are the future of dollar liquidity and trade
(Thread)
The full post here dives into all of this in more detail
https://t.co/DFrbZsaEhp
Thanks for reading, more coming soon. Follow and retweet to be in the loop!
Risks:
- Fragmentation: 10 chains, 100s of pools, messy liquidity
- FX overreach: 99% of supply is USD, local stables struggle. Solving FX issues will take time.
- User sovereignty: extractive loyalty points, walled gardens
- Regulatory weight: old system w blockchain skin
The big bet is rails
Controlling the settlement layer means controlling the spreads, FX, fees, data
Visa did $13.2T volume in 2024, generating $36B in revenue.
Bringing cross border, FX, B2B, remittances on chain is a much bigger opportunity.
Defensibility is also eroding
Issuers submitted proposals to win the USDH ticker on Hyperliquid.
Just about every issuer participated, pledging all yield back to the ecosystem
Power is shifting from the issuers to the platforms (who have the volume/adoption/stickiness)
PayPal launched incentives on Solana to push PYUSD adoption
Incentives pushed mcap to $1B
When incentives fell, mcap fell by ~40%
Even with PayPal's brand, distribution and deep pockets, changing behavior in payments is very hard.
Stablecoin Issuance looks profitable on paper (T bill yields)
Examples overindex on Tether
- Revenues capped by Fed rates (which are going down)
- Growth requires massive incentives + licenses
- Users default to USDC/USDT at the slightest friction
High costs, limited upside
Before I start, here's the full post covering this in more detail:
https://t.co/DFrbZsaEhp
In this thread, we'll cover:
- Why Stablecoins are a tough business
- Motivations behind capturing the rails
- Challenges
Global Finance is quietly undergoing seismic shifts.
The existing system for dollar liquidity, built on Eurodollars and banks, is starting to crack
Here's why stablecoins are the future of dollar liquidity and trade
(Thread)
That's it, I hope you found that useful.
I write deep dives about stablecoins and payments, follow and retweet to be in the loop
And in case you missed it, here's my stablecoin primer
https://t.co/k9P56her7Q
Global Finance is quietly undergoing seismic shifts.
The existing system for dollar liquidity, built on Eurodollars and banks, is starting to crack
Here's why stablecoins are the future of dollar liquidity and trade
(Thread)
Here's my post that dives into this in a lot more detail
https://t.co/PzqHbzmraL
I dive into Eurodollars, Basel III, systemic fragility and the case for a new rail