The Transformation of the Stablecoin Market and the Rise of YBS

With the turbulence in the global financial situation, the stablecoin market is undergoing profound changes. The traditional dollar system is facing challenges, while the emerging yield-bearing stablecoin (YBS) is gradually coming to the forefront. This article will explore the latest trends in the stablecoin market and the prospects of YBS.

The Erosion of Dollar Hegemony

Recently, the global financial market has experienced a triple whammy of stocks, bonds, and currencies, accelerating the collapse of the fiat currency system. This situation is likely to give rise to a new generation of on-chain stablecoins, especially non-USD, non-full reserve interest-bearing stablecoins (YBS). Although non-full reserve stablecoins are still in the theoretical stage, driven by capital efficiency, some reserve stablecoins are expected to become mainstream in the market.

Currently, non-US dollar stablecoins are still in experimentation, and the global currency status of the US dollar is temporarily difficult to shake. The renminbi is unlikely to be internationally mainstreamed on a large scale in the short term, and its replacement of the US dollar will be a long process. Therefore, this article will focus on the latest developments of existing stablecoins, especially the overall picture of YBS.

Dollar Policy During the Trump Era

The issuance of the US dollar mainly relies on the cooperation between the Federal Reserve and the Treasury, amplifying the money multiplier through commercial banks. US Treasury yields have become the basis for global financial pricing, and the dollar has become the world currency, with countries needing to hold dollars to reduce transaction costs.

However, the tariff policy of the Trump administration is disrupting this cycle. Countries are starting to flee the US bond market, and the US dollar and US bonds are gradually becoming risk assets. The seigniorage collected by the dollar globally is facing challenges, which may instead become a catalyst for the "globalization" of cryptocurrencies.

Stablecoin Market Landscape

The current total market value of cryptocurrencies is approximately $2.7 trillion, but the issuance of stablecoins is only $230 billion. With the decline of some asset-backed stablecoins, true reserves have become mainstream, but this has also reduced capital efficiency. In contrast, the value of Bitcoin and Ethereum is more "created out of nothing".

The importance of stablecoins is becoming increasingly prominent. YBS offers new possibilities for the market by converting the volatility of cryptocurrencies into stablecoins.

Ethena's USDe Model

Ethena's USDe is one of the most successful illegal currency reserve stablecoins in recent times. Its core mechanism is to hedge risks on centralized exchanges and gain profits through funding rate arbitrage. Ethena is also attempting to mimic the US dollar system and has designed a multi-layer token structure.

However, USDe faces the challenge of insufficient sources of income. To maintain a high yield, Ethena needs to attract more users to use USDe for trading and payments, rather than just as a staking asset.

The Essence and Challenges of YBS

The yield of YBS is essentially a customer acquisition cost, requiring more users to view it as an equivalent to the dollar and actively hold it. Currently, the YBS yield on Ethereum mainly comes from Ethena and Pendle, and the yield has significantly fallen below the DeFi boom period.

The main challenges facing YBS include:

1. The underlying yield overly relies on U.S. Treasury bonds
2. Strong secondary market liquidity support is needed.
3. Difficult to compete with USDT in trading and payment scenarios.

Only when the majority of users view YBS as a stablecoin rather than a yield tool can YBS truly grow and thrive. Otherwise, if all users pursue high yields, the entire system will be difficult to maintain.

In the future, whether YBS can reshape the DeFi ecosystem and shift its focus from lending to yield remains to be seen. The competitive focus of the stablecoin market is still on market share; only by surpassing USDT in usage scenarios can YBS truly become mainstream.