How does Ethereum support the widespread use of stablecoins?

In 2025, the stablecoin market continues to maintain rapid rise. According to DeFiLlama data, as of May 26, 2025, the global total supply of stablecoins (i.e., market capitalization) has risen to approximately $24.6382 billion, accounting for about 7.04% of the total supply of encryption assets.

This data shows a 9.5% increase compared to the data in the "2025 Stablecoin Landscape" report released by Dune and Artemis in March 2025, which states that "in 2024, the total global supply of stablecoins will rise to $225 billion," demonstrating the rapid expansion of stablecoins in the encryption asset ecosystem.

According to OKG Research, under the optimistic scenario where countries gradually establish compliance frameworks for encryption assets and institutions and individuals widely adopt stablecoins, the global stablecoin market supply is expected to reach 3 trillion US dollars by 2030, with monthly on-chain transaction volume reaching 9 trillion US dollars, and annual transaction total possibly exceeding 100 trillion US dollars.

01 stablecoin market overview

Currently, the stablecoins USDT issued by Tether and USDC issued by Circle remain dominant in the stablecoin market. According to data released by CoinGecko in May 2025, the supply of these two stablecoins accounts for a total of 86.06% of the overall supply in the stablecoin market.

USDT

In May 2025, the total supply of USDT surpassed 150 billion dollars for the first time, reaching 150.663 billion dollars, accounting for 62% of all stablecoins. Its rise is mainly supported by the payment demand in emerging markets, especially with trading performance on TRON being particularly active, with an average daily trading volume close to 30 billion dollars.

In April 2025, Tether CEO Paolo Ardoino posted that the number of users using USDT will increase by 13% in the first quarter of 2025. At present, the application focus of USDT has gradually shifted to the P2P remittance market, and the adoption of USDT on the institutional side has a downward trend.

USDC

USDC issued by Circle occupies nearly 25% of the stablecoin market, making it the second largest stablecoin by supply in the current market.

USDC is publicly audited monthly by third-party organizations, complying with EU MiCA regulations, and has established application collaborations with payment institutions like Visa and Mastercard; mainstream DeFi protocols such as MakerDAO, Compound, Aave, and Curve also support the use of USDC.

Emerging stablecoins are gradually rising

According to the "2025 Stablecoin Report" released by Dune and Artemis, besides the two major stablecoin giants USDT and USDC, algorithmic stablecoins are also maintaining active applications in the Decentralized Finance ecosystem, and third-generation stablecoins using mixed collateral models (such as USDe) are rewriting the market landscape.

Recently, the emerging stablecoins that have garnered widespread attention in the market include: USDE issued by Ethena Labs, which has a total supply that rose to $7.082 billion by May 2025, making it the third largest stablecoin by supply globally; the stablecoin USD1 issued by the Trump family's DeFi platform World Liberty Financial in March 2025 has rapidly expanded its total supply to $2.133 billion; and USD0 has reached a total supply of $641 million.

02 The Application of Stablecoins on Ethereum

In the Ethereum ecosystem, stablecoins play a key role in trading and lending scenarios. They not only serve as the underlying asset for participating in Decentralized Finance (DeFi) activities but also play an important role in driving the overall trading volume and asset liquidity of Ethereum.

Trading Scenario:

According to Techinasia, by April 2025, the trading volume of stablecoins on Ethereum reached $908 billion. In this growth trend, USDC performed outstandingly, with a trading volume exceeding $500 billion in the past six months. Other stablecoins, such as DAI, also exhibited an active trading trend.

Lending Scenario:

DeFi protocols such as Aave and Compound on Ethereum support lending services for various stablecoins. Users can deposit USDT, USDC, or DAI to earn interest, or use these stablecoins as collateral to borrow other assets. For example, Aave offers collateral services with an annual percentage yield (APY) of up to 14%, while Compound's related services also have an annual percentage yield of up to 12%.

Payment Scenarios:

In 2021, Visa announced the use of USDC for payment settlement on Ethereum, becoming the first major payment network to adopt encryption assets for settlement.

The stablecoin payment platform Alchemy Pay has partnered with the Ethereum Layer 2 network ZKFair, allowing users to pay Gas fees using USDC, making it easier for more users to purchase assets.

Practical Applications in Cross-Border Settlement:

StraitsX issued the Singapore Dollar stablecoin XSGD and the Indonesian Rupiah stablecoin XIDR on Ethereum and Zilliqa, aiming to address the high costs and low efficiency issues in cross-border payments.

Case of Layer2 Solutions Combined with Stablecoins:

• Tether has partnered with LayerZero to launch a multi-chain version of USDT — USDT0, based on LayerZero's Omnichain Fungible Token (OFT) standard, enabling cross-chain transfers without intermediary bridging or wrapped assets, enhancing the liquidity and usability of the stablecoin.
• MStableChain has proposed a system that supports multiple stablecoins as transaction fees, aimed at providing stable transaction costs and flexible payment options. The system ensures compatibility with the Ethereum Virtual Machine (EVM) through multi-currency units and multi-type RPC mechanisms, facilitating mass adoption.

03 Regulatory Compliance Examples

• Hong Kong, China: On May 21, 2025, the Legislative Council of the Hong Kong Special Administrative Region passed the "Stablecoin Ordinance Draft," marking Hong Kong as the first jurisdiction in the world to establish a full regulatory framework for the conversion of fiat currency to stablecoins. United States: As of May 22, 2025, the GENIUS Act, a U.S. stablecoin, has entered the process of being amended. The core of the GENIUS Act includes key elements such as issuance eligibility restrictions, reserve requirements, compliance obligations, user protection, and international applicability. The bill clearly stipulates that issuers must fully support their issued stablecoins with the equivalent value of highly liquid assets, ensuring that users can redeem them at any time. At the same time, in order to protect the interests of token holders, if the issuer goes bankrupt, its assets should be prioritized to pay off user funds. In addition, issuers are required to strictly comply with compliance obligations such as anti-money laundering (AML) and counter-terrorism financing (CFT) to prevent stablecoins from being used for illegal purposes.
• European Union: The MiCA regulatory framework will officially take effect on December 31, 2024. It requires stablecoin issuers to have transparent and auditable reserve assets. USDC has been adopted by institutions such as Worldpay due to its early certification under MiCA.