In-depth Analysis of the Stablecoin Market Landscape: From Medium of Exchange to Economic Cornerstone

Stablecoins, as a core component connecting traditional finance and the cryptocurrency ecosystem, are seeing their strategic position continuously rise. From the earliest centralized custody model to the current stablecoins issued by protocols themselves and driven by on-chain synthesis and algorithmic mechanisms, the market structure has undergone fundamental changes.

At the same time, the demand for stablecoins from DeFi, RWA, LSD, and even L2 networks is rapidly expanding, further promoting the formation of a new pattern of coexistence, competition, and collaboration among various models.

This is no longer a simple market segmentation issue, but a deep competition regarding the "future forms of digital currency" and "on-chain settlement standards." This report focuses on the main trends and structural characteristics of the current stablecoin market, systematically sorting out the operational mechanisms, market performance, on-chain activity, and policy environment of mainstream projects, helping to effectively understand the evolutionary trends of stablecoins and the future competitive landscape.

Stablecoin Market Trends

Global stablecoin total market value and growth trend

As of May 26, 2025, the total market value of global stablecoins has surged to approximately $246.38 billion, an increase of about 4927.64% compared to around $5 billion in 2019, showing explosive growth. This trend not only highlights the rapid expansion of stablecoins in the cryptocurrency ecosystem but also underscores their increasingly irreplaceable position in areas such as payments, Medium of Exchange, and decentralized finance.

In 2025, the stablecoin market continues to maintain rapid growth, increasing by 78.02% compared to the market value of 138.4 billion USD in 2023, currently accounting for 7.04% of the total cryptocurrency market value, further consolidating its core market position.

2019-2022: The market value of stablecoins surged from 5 billion to 167.9 billion USD, a 32-fold increase, mainly driven by the explosion of the DeFi ecosystem, increased demand for cross-border payments, and market risk aversion.

2023: Market capitalization fell by 17.57%, mainly due to the collapse of TerraUSD and the tightening of global cryptocurrency regulations.

2024-2025: Strong market capitalization rebound, growth of 78.02%, reflecting increased institutional participation and the continued expansion of DeFi applications.

Recent growth drivers

Macroeconomic Financial Environment: Against the backdrop of increasing global inflationary pressures and turmoil in financial markets, the demand for "on-chain cash" has significantly risen among investors. The U.S. Treasury has defined stablecoins as "on-chain cash," providing a policy rationale for attracting traditional capital. At the same time, stablecoins are also seen as a safe haven during turbulent fluctuations in crypto assets.

Technological advances and cost advantages: Some efficient public chains represented by Tron have significantly reduced transaction costs, with almost zero fees for USDT transfers on the Tron chain, attracting a large number of trading users. High-throughput blockchains like Solana are also promoting the expansion of stablecoin usage scenarios due to their high speed and low fee characteristics.

Institutions adopt enhancement: In 2024, BlackRock will issue a BUIDL tokenized fund settled in USDC for on-chain exploration of assets such as bonds and real estate, highlighting the importance of stablecoins in institutional-level settlements. According to OKG Research's calculations: in an optimistic scenario where global compliance frameworks gradually unfold and both institutions and individuals adopt them widely, the global supply of stablecoins will reach $3 trillion by 2030, with monthly on-chain transaction volumes reaching $9 trillion and annual transaction totals possibly exceeding $100 trillion. This means that stablecoins will not only stand alongside traditional electronic payment systems but will also occupy a structurally foundational position in the global clearing network. In terms of market capitalization, stablecoins will become the "fourth category of base currency assets" following government bonds, cash, and bank deposits, serving as an important medium of exchange for digital payments and asset circulation.

DeFi Demand Surge: Citibank points out that stablecoins are the "main entry point" for DeFi, and their low volatility characteristics make them the preferred choice for value storage and trading. A Chainalysis report shows that stablecoins account for over two-thirds of on-chain trading volume, widely used in scenarios such as lending, DEX liquidity provision, and mining. In 2024, the TVL growth of leading DeFi protocols like Uniswap and Aave is expected to be around 30%, with USDC and DAI as the main trading pairs. After the 2024 U.S. elections, the market value of stablecoins increased by $25 billion, further validating their core role in DeFi scenarios.

Stablecoin Market Structure and Competitive Landscape

Market Concentration and Overall Pattern

Currently, the stablecoin market is highly concentrated, with Tether's market capitalization reaching $150.335 billion, accounting for 61.27%; USD Coin's market capitalization is $60.822 billion, accounting for 24.79%. Together, they account for a market share of up to 86.06%, forming a dual oligopoly.

Nevertheless, emerging stablecoins are gradually rising to challenge the dominant position. For example, the USDE launched by Ethena Labs has grown from $146 million at the beginning of 2024 to $4.889 billion, an increase of over 334 times, making it the fastest-growing stablecoin. In addition, USD1 and USD0 also show good market expansion trends, but in the short term, they are still insufficient to shake the dominance of USDT and USDC.

Competitive Landscape Analysis

Market competition mainly unfolds between three types of stablecoins:

Fiat-collateralized stablecoins: USDT and USDC are backed by USD reserves, gaining an advantage in centralized exchanges and traditional finance through transparency and compliance. For example, USDT added a market capitalization of $30 billion in 2024, demonstrating its market trust.

Decentralized stablecoin: USDE, through a synthetic dollar mechanism and native yield model, becomes a popular trading pair on a certain DEX in 2024, with its locked value increasing by 50%, rapidly rising in the DeFi ecosystem; while DAI relies on its decentralized governance to attract DeFi users, but has a smaller scale, only $3.631 billion.

Emerging stablecoins: USD1 rapidly expanded to $2.133 billion through institutional endorsement; USD0 attracted users with DeFi incentive mechanisms, reaching a market capitalization of $641 million.

Others: The 2022 collapse of TerraUSD led to a trust crisis in algorithmic stablecoins, prompting the market to tilt towards more transparent fiat-backed stablecoins, resulting in a market share increase of approximately 10% for USDC between 2023 and 2024.

The Rise Logic of USDE

USDE is a synthetic dollar stablecoin based on Ethereum, developed by Ethena Labs, using staked Ethereum as collateral, and employing a delta-neutral hedging strategy to maintain its peg to the US dollar. Its rapid growth can be attributed to the following factors:

Innovative Yield Mechanism: USDE offers high returns to holders through the "Internet Bond" feature, which derives from the staking rewards of stETH and the funding rate spread in the perpetual contract market. This high-yield model has attracted a large number of DeFi users and institutional investors, especially in a low-interest rate environment where traditional financial products struggle to provide similar returns.

Deep Integration of DeFi Ecosystem: The extensive support for USDE on DeFi platforms makes it one of the preferred stablecoins for DeFi users. Users can easily trade, provide liquidity, or participate in lending without worrying about price fluctuations. Data shows that the locked amount of USDE on a certain DEX has increased by 50%, reflecting its important position in the DeFi ecosystem.

Decentralization and anti-censorship features: As a stablecoin fully based on crypto assets, USDE does not rely on traditional financial systems, which is particularly attractive to users pursuing decentralization, especially in areas where traditional financial services are limited or restricted.

Growing Market Demand: With the expansion of the DeFi and cryptocurrency ecosystem, the demand for stablecoins continues to rise. USDE, as an innovative and fully decentralized stablecoin, meets the market's demand for new stablecoin solutions.

Institutional Support and Collaboration: Ethena Labs' partnerships with well-known crypto investment institutions and exchanges have enhanced market confidence and liquidity for USDE.

Marketing and Community Engagement: Ethena Labs quickly attracted the attention of users and developers through effective marketing strategies and community incentive programs, promoting the adoption of USDE.

Challenges of Emerging stablecoins

USD1: Issued by World Liberty Financial, USD1 has a market capitalization of 2.133 billion USD, ranking 7th. Its market cap skyrocketed from 128 million USD to 2.133 billion USD in just one week, showing rapid growth.

WLFI is associated with the Trump family and has received a $200 million investment from a certain trading platform and MGX, enhancing institutional endorsement. The New Money report points out that USD1 has been chosen as the settlement currency for significant transactions, such as the cooperation project with the Pakistani government, further enhancing its market influence.

USD1 is rapidly expanding through exclusive agreements and institutional adoption, but its political background may pose regulatory risks.

USD0: The USD0 issued by the Usual platform has a market capitalization of $641 million, ranking 12th. According to the Usual Blog, it attracts users through the USUAL token incentive mechanism, allowing holders to participate in governance and share in platform profits.

USD0 combines the low volatility of stablecoins with the yield potential of DeFi, attracting users who focus on decentralized innovation.

The unique positioning of USD0 in the DeFi ecosystem brings growth potential, but it needs to enhance market awareness and liquidity.

Emerging stablecoins challenge the market through differentiated strategies, but it is difficult to shake the dominance of USDT and USDC in the short term.

Mainstream Stablecoin Analysis and Comparison

This section systematically analyzes and compares the top five mainstream stablecoins ranked by market capitalization from the dimensions of mechanism structure, asset support types, liquidity and application scenarios, and risk points.

Core Parameter Comparison Table

| Parameter | USDT | USDC | DAI | USDE | USD1 | |------|------|------|-----|------|------| | Issuer | Tether | Circle | MakerDAO | Ethena Labs | World Liberty Financial | | Asset Type | Fiat Currency Collateral | Fiat Currency Collateral | Crypto Asset Collateral | Synthetic USD | Fiat Currency Collateral | | Reserve Assets | Cash, bank deposits, short-term government bonds, etc. | Cash, short-term U.S. government bonds | ETH, USDC, etc. | stETH | U.S. government bonds, cash, etc. ( Unpublished details ) | | Market Cap( USD) | 1503.35 | 608.22 | 36.31 | 48.89 | 21.33 | | Market Share | 61.27% | 24.79% | 1.48% | 1.99% | 0.87% | | Transparency | Quarterly Report | Monthly Audit | On-chain Real-time Check | On-chain Verifiable | Not Yet Public | | Application Scenarios | Trading, Payment, DeFi | Institutional Settlement, DeFi | DeFi Lending | DeFi Yield | Cross-Border Settlement | | Risk Points | Reserve Doubts | Reliance on Traditional Finance | Collateral Volatility | DeFi Ecosystem Risks | Political Connections |

Liquidity and Trading Pair Distribution

The liquidity of mainstream stablecoins such as USDT and USDC is extremely abundant, with depth trading pairs available on the vast majority of mainstream exchanges and decentralized trading platforms. They cover almost all major public chains: USDT/USDC can be traded on chains like Ethereum, Tron, Solana, BSC, and Polygon; while emerging stablecoins have mainly launched on specific public chains and certain centralized exchanges in their early stages. The Tron network recently introduced zero fees for USDT, further enhancing the trading volume and liquidity of USDT on that chain. Overall, USDT and USDC are the most globally liquid stablecoins, while the liquidity of other stablecoins is concentrated in specific ecosystems and exchanges.

Reserve Transparency

Reserve transparency is a key factor in assessing the credibility of stablecoins. Here is a detailed analysis of the reserve transparency of various stablecoins:

USDT: Reserve status: Claims to be supported by cash, bank deposits, short-term government bonds, and other assets. Transparency: Reserve reports are published quarterly, but have long been questioned, part