Stablecoins: The first killer app

What are Stablecoins and how are they changing crypto and traditional finance?

Stablecoins are digital assets designed to maintain a stable value relative to a national currency or other reference rate (the vast majority in terms of market capitalisation are pegged to the USD).

Stablecoins were initially used primarily to facilitate trading, lending or borrowing in other digital assets, predominantly on or via digital asset trading platforms (centralised exchanges, or CEXs).

However, in more recent years, the dominant use case for stablecoins has been changing to other, non-CEX uses. There is growing evidence of increasing stablecoin use for a variety of purposes akin to those provided in traditional finance (TradFi). Stablecoins are being used to save in USD terms, to transact in USD terms, and for cross-border USD-to-USD transactions. This is a more stable and faster-growing use case for stablecoins than the original CEX use case. We expect this use case to continue to grow, particularly if US stablecoin regulation is passed, as now looks likely under a Trump administration.

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