The stablecoin duopoly is ending
The stablecoin duopoly is ending
Three's a crowd
The stablecoin market, long dominated by Tether and Circle's USDC with roughly 85% of the $300 billion supply, is fracturing as new entrants erode their duopoly through lower issuance costs, yield-sharing innovations, and regulatory shifts.
Intermediaries like exchanges, wallets, and DeFi protocols—such as Phantom's Bridge-issued Phantom Cash and Hyperliquid's USDH—are launching proprietary stablecoins to capture user deposit yields, while emerging players like Ethena's USDe ($14.7 billion supply), PayPal's PYUSD, and Ondo's USDY gain traction by offering competitive returns, contrasting Tether's zero-yield model and Circle's limited sharing via Coinbase.
Fixed costs have plummeted thanks to white-label providers like Anchorage and Stripe's Bridge, enabling easier entry, and post-GENIUS regulations now allow banks like JPMorgan and Bank of America to issue stablecoins backed by high-quality liquid assets without new charters, potentially via consortia including Paxos and Robinhood. Enhanced cross-chain swapping technologies further commoditize stablecoins, diminishing network effects and fueling a "race to the bottom" on yields, with the market poised for explosive growth as competition intensifies.
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