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New Landscape of the Stablecoin Market: Stricter Regulations, AI Integration, USDT Leading the Way
The Intersection and Future of Stablecoins, Decentralized Finance, and AI
In this episode, we invited the founder of dForce, Ren Dao, to have an in-depth discussion on the development trends of stablecoins, Decentralized Finance, and AI.
Changes in the stablecoin market
The people pointed out that since the LUNA crash in 2022, the stablecoin market has shown a clear differentiation. Fiat-backed stablecoins still dominate the market, while algorithmic stablecoins and over-collateralized stablecoins have seen limited development. Notably, Ethena's USDE, as a financial stablecoin based on crypto asset valuation arbitrage, has performed outstandingly in this cycle.
Overall, the supply of stablecoins has dropped from about $180 billion in 2022 to $130-140 billion, but it has now rebounded to about $250 billion. This growth is mainly driven by fiat-backed stablecoins rather than on-chain native stablecoins.
The Impact of Regulatory Policies
The United States and the European Union are accelerating the advancement of a stablecoin regulatory framework. The U.S. Genius Act aims to establish a stablecoin regulatory framework, which is of significant importance for industry development. The act clarifies the identity of the issuing entities and categorizes the regulation.
These regulatory measures not only affect the U.S. market but will also have a demonstration effect on other regions of the world. For example, Hong Kong is actively promoting a stablecoin sandbox program, including the development of a Hong Kong dollar stablecoin and an offshore renminbi stablecoin.
USDT vs USDC
USDT's growth rate in this cycle far exceeds that of other competitors. Mindao believes that this is mainly due to the differences in market positioning and application scenarios between USDT and USDC. USDT is closer to a "shadow dollar" and has a broader application in trading, OTC, and perpetual contracts. In contrast, USDC's main advantage lies in its deposit and withdrawal channels.
Traditional Financial Institutions Enter the Stablecoin Market
With the clarification of the regulatory framework, traditional financial institutions and large tech companies may be more proactive in entering the stablecoin market. This will pose challenges to the existing market landscape, especially for competitors like USDC. However, the network effect and widespread application of USDT may allow it to maintain an advantage in the competition.
The Integration of Decentralized Finance, AI, and Stablecoins
The people believe that the combination of AI and Decentralized Finance will bring revolutionary changes. Future DeFi products may require only 10-20% of their logic to be implemented on-chain, while 80% of the logic can be completed by AI agents. This combination will greatly enhance the flexibility and innovation speed of DeFi products.
In the combination of AI and stablecoins, stablecoins may become the preferred medium for payments and settlements between AI agents. This combination will drive the formation of a more automated and efficient financial services ecosystem.
Conclusion
The stablecoin market is undergoing rapid development and transformation. With the clarification of regulations, the entry of traditional financial institutions, and the integration with AI technology, stablecoins will play an increasingly important role in the future financial ecosystem. At the same time, the combination of DeFi and AI will also bring new opportunities and challenges to the entire crypto financial sector.