The New Landscape of the Crypto Assets Market: The Rise of On-Chain Stablecoins

Recently, the global financial market has been experiencing significant fluctuations, and the traditional fiat currency system is facing severe challenges. Against this backdrop, stablecoins in the Crypto Assets sector, especially the on-chain interest-bearing stablecoin (YBS), are迎来新的发展机遇.

The 2008 financial crisis gave birth to Bitcoin, and the current turmoil in the fiat currency system may promote the growth of on-chain stablecoins. Although non-USD, non-full-reserve interest-bearing stablecoins are still in the theoretical conceptual stage, some reserve-backed stablecoins are likely to become mainstream in future markets.

Currently, the US dollar remains the dominant currency globally. The Renminbi will not undergo large-scale internationalization in the short term, and replacing the US dollar will be a lengthy process. Therefore, this article mainly focuses on the latest developments in the on-chain stablecoin system based on the US dollar and fully backed reserves.

The trade policy of the Trump administration is breaking the cycle of dollar hegemony. Countries are reducing their holdings of U.S. Treasury bonds, and the dollar/U.S. Treasury bonds are becoming risk assets. This change could trigger a spiral collapse similar to Luna-UST, but with a longer time span.

The fragmented global trade finance system has instead provided opportunities for Crypto Assets. In the near future, competition among stablecoins will continue to exist. In the era of global arbitrage, on-chain stablecoins will play an important role.

The market value of Crypto Assets is inflated, and the issuance of stablecoins better reflects the real situation. Currently, the 230 billion USD stablecoins need to provide liquidity for the 2.7 trillion USD crypto market, and this inverted structure gives YBS practical significance.

Ethena's USDe is one of the most successful fiat-backed stablecoins in recent times. Its hedging model utilizes funding rate arbitrage to generate profits. However, for USDe to be truly successful, it needs to gain wider adoption in scenarios such as trading and payments.

The essence of YBS is a customer acquisition cost. It requires more users to view it as a dollar equivalent and hold it, rather than just pursuing staking yields, to maintain it long-term. Currently, the yields of major YBS projects on Ethereum have significantly declined, ushering in an era of low-interest wealth management.

The future competitive focus of YBS will still be on market share. Only if the majority of users treat it as a stablecoin, rather than pursuing high yields, can YBS maintain a high yield and squeeze out the market space of traditional stablecoins like USDT.