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by Sarah Connor
Why stablecoins are crypto's killer app
Amid endless debate about what crypto is for, one product quietly won the argument: the stablecoin. It is crypto's clearest product-market fit.
- The stablecoin is crypto's clearest product-market fit: moving a dollar costs under a cent and settles in under a second, globally and 24/7/365: a structural improvement over correspondent banking, not a marginal one.
- Aggregate stablecoin supply is crypto's dry-powder gauge: expansion means buying power building, contraction means capital leaving the system entirely.
- Issuance is where value accrues: who issues, under what reserves, on which chains decides where the money flows.
- When a bank turns USDC mint/redeem into regulated distribution, value accrues to the issuer, to banks via client flow, and to chains via settlement.
- The TT desk call: go long regulated rails: read supply, reserves and payment volume together, because the stablecoin that captures durable payment volume under a clear framework is the one that wins.
The fit is settlement
Moving a dollar via stablecoins costs under a cent and settles in under a second, globally, 24/7/365. That is a structural improvement over correspondent banking, not a marginal one.
Sub-cent, sub-second, global. That's not an incremental upgrade to payments: it's a different system.
The dry-powder gauge
Aggregate stablecoin supply is crypto's cash on the sidelines. Expansion means buying power building; contraction means capital leaving the system entirely. Watching where new supply is minted maps intent before it becomes a bid.
Issuance is where value accrues
Who issues, under what reserves, on which chains decides where value flows. A bank turning USDC mint/redeem into regulated distribution accrues value to the issuer, to banks via client flow, to chains via settlement.
- Supply: expansion vs contraction
- Reserves: quality and regulatory standing
- Payment volume: real usage, not market cap
The TT desk thoughts
Go long regulated rails. Read supply, reserves and payment volume together: the stablecoin that captures durable payment volume under a clear framework is the one that wins.
What would change our mind
Durable payment volume accruing to unregulated issuers. The position is long the regulated rails specifically: volume choosing the other side would say the framework is not what users are selecting for.
Keep reading
Crypto Stablecoins & Payments Research: the full framework · All alpha