The New Order of the Stablecoin Market: Technology, Competition, and the Struggle for Sovereignty

Stablecoins, as a core component connecting traditional finance and the cryptocurrency ecosystem, are experiencing an increasing strategic position. From the early centralized custody models to the current self-issued stablecoins driven by on-chain synthesis and algorithmic mechanisms, the market structure has fundamentally changed.

At the same time, the demand for stablecoins in 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 form of digital currency” and “on-chain settlement standards.” This report focuses on the main trends and structural characteristics of the current stablecoin market, systematically reviewing the operational mechanisms, market performance, on-chain activity, and policy environment of mainstream projects, to help effectively understand the evolution 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 an explosive growth trend. This trend not only highlights the rapid expansion of stablecoins within the cryptocurrency ecosystem but also underscores their increasingly irreplaceable position in areas such as payments, trading, and decentralized finance.

In 2025, the stablecoin market continues to grow rapidly, with a 78.02% increase compared to the market capitalization of $138.4 billion in 2023, currently accounting for 7.04% of the total cryptocurrency market capitalization, further solidifying its core market position.

The table below shows the annual data and growth of stablecoin market value from 2019 to 2025:

Recent Growth Drivers

Macroeconomic Financial Environment:

Against the backdrop of rising global inflation pressures and increasing turmoil in financial markets, the demand for “on-chain cash” among investors has risen significantly. The U.S. Treasury has defined stablecoins as “on-chain cash,” providing policy logic support for their absorption of traditional capital. Meanwhile, during the violent fluctuations of crypto assets, stablecoins are also seen as a safe haven.

Technological advancements and cost advantages:

Some efficient public chains represented by Tron significantly reduce transaction costs, with USDT transfers on the Tron chain having almost zero fees, attracting a large number of trading users. High-throughput blockchains like Solana also promote the expansion of stablecoin use cases due to their high speed and low fee characteristics.

Institution adoption enhanced:

In 2024, BlackRock will issue a 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, in an optimistic scenario where global compliance frameworks are gradually established and both institutions and individuals widely adopt them, the global supply of stablecoins is expected to reach $3 trillion by 2030, with a monthly on-chain trading volume of $9 trillion and an annual trading volume potentially exceeding $100 trillion. This indicates that stablecoins will not only rival traditional electronic payment systems but will also occupy a structural foundational position in the global settlement network. In terms of market capitalization, stablecoins will become the “fourth type of fundamental currency asset” following government bonds, cash, and bank deposits, serving as an important medium for digital payments and asset circulation.

DeFi demand pull:

Citibank pointed out that stablecoins are the “main gateway” to DeFi, and their low volatility characteristics make them the preferred choice for value storage and transactions. A Chainalysis report shows that stablecoins account for more than two-thirds of on-chain trading volume, widely used in scenarios such as lending, DEX liquidity provision, and mining. In 2024, the TVL of top DeFi protocols such as a certain trading platform and a certain lending platform is expected to grow by about 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 dollars, further validating their core role in DeFi scenarios.

Structure and Competitive Landscape of the Stablecoin Market

Market Concentration and Overall Pattern

Currently, the stablecoin market is highly concentrated, with one stablecoin having a market capitalization of $150.335 billion, accounting for 61.27%; another stablecoin has a market capitalization of $60.822 billion, accounting for 24.79%. Together, their market share reaches as high as 86.06%, forming a duopoly.

Nevertheless, emerging stablecoins are gradually rising to challenge the dominant position. For example, 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. Moreover, USD1 and USD0 also show good market expansion trends, but in the short term, they are still not enough to shake the dominant position of mainstream stablecoins.

Competitive Landscape Analysis

Market competition mainly unfolds between three types of stablecoins:

Fiat-backed stablecoins: Mainstream stablecoins are supported by USD reserves, gaining an advantage in centralized exchanges and traditional finance due to transparency and compliance. For example, a certain stablecoin added a market value of $30 billion in 2024, demonstrating its market trust.

Decentralized stablecoin: USDE, through the synthetic dollar mechanism and native yield model, will become a popular trading pair on a certain DEX in 2024, with a 50% increase in locked volume, rapidly rising in the DeFi ecosystem; while DAI, relying on the decentralized governance of MakerDAO, attracts DeFi users, but is smaller in scale, at only $3.631 billion.

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

Others: In 2022, the collapse of a certain algorithmic stablecoin led to a crisis of trust, prompting the market to lean towards more transparent fiat-collateralized stablecoins. A certain stablecoin thus saw its market share increase by about 10% between 2023 and 2024.

The Rise Logic of USDE

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

Innovative earning mechanism:

USDE provides high returns for holders through the “Internet Bond” feature, sourced from the staking rewards of stETH and the funding rate spread in the perpetual contract market. This high-yield model has attracted many DeFi users and institutional investors, especially in a low interest rate environment where traditional financial products struggle to offer similar returns.

Deep integration of the DeFi ecosystem:

The widespread support of USDE on DeFi platforms makes it one of the top stablecoins for DeFi users. Users can easily trade, provide liquidity, or participate in lending without worrying about price fluctuations. DefiLlama 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 has significant appeal among users pursuing decentralization, especially in regions where traditional financial services are limited or restricted.

Growth of market demand:

With the expansion of the DeFi and cryptocurrency ecosystem, the demand for stablecoins continues to increase. USDE, as an innovative and fully decentralized stablecoin, meets the market’s demand for new stablecoin solutions.

Institutional support and cooperation:

Ethena Labs’ collaboration with well-known crypto investment institutions and exchanges has strengthened 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.

The Challenges of Emerging Stablecoins

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

WLFI has connections with the Trump family and secured a $200 million investment from a certain exchange and MGX, enhancing institutional backing. The New Money report indicates that USD1 has been chosen as the settlement currency for significant transactions, such as the collaboration project with the Pakistani government, further boosting its market influence.

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

USD0: USD0 issued by the Usual platform, with a market cap of 641 million USD, ranked 12th. According to Usual Blog, it attracts users through the USUAL token incentive mechanism, allowing holders to participate in governance and share 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 mainstream stablecoins in the short term.

Mainstream Stablecoin Analysis and Comparison

This section conducts a systematic analysis and comparison of the top five mainstream stablecoins by market capitalization from the dimensions of mechanism structure, asset support types, liquidity and application scenarios, and risk points.

Core Parameter Comparison Table

Liquidity and Trading Pair Distribution

The liquidity of mainstream stablecoins is extremely abundant, with deep trading pairs available on the vast majority of mainstream exchanges and decentralized trading platforms. They almost cover all major public chains: mainstream stablecoins can be traded on Ethereum, Tron, Solana, BSC, Polygon, and other chains; while emerging stablecoins initially launch mainly on specific public chains and some centralized exchanges. The Tron network recently introduced zero fees for a certain stablecoin, further enhancing the trading volume and liquidity of that stablecoin on the chain. Overall, the two major mainstream stablecoins 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 are the evaluations of various