Stablecoins
Stablecoins are the most successful product to emerge after decentralized exchanges. At $250B+ in market cap, they’ve grown fast but are still early, 99% remain fiat-backed & centralized.
I was in San Francisco speaking with a billionaire investor Nikhil Kamat who co-founded investing app Zerodha and our conversation made me realize how much stablecoins still live in the echo chamber of crypto Twitter.
Nikhil: “I keep hearing about stablecoins like USDC and USDT. As an investor, how do I actually use them? What makes them special?”
Me: “You can trade with them, earn APY.”
Nikhil: “But I can do that with a bank and get FDIC insurance. And if I want to hold currency, why stick to USD that has debt risks? Why not AED in Dubai?”
Me: “True. But with stablecoins, you can self-custody and move them anywhere instantly.”
Nikhil: “So I get full custody, no freezing, no risk of seizure. Sure, That has some value”
Me: “Not exactly. USDC and USDT can be frozen anytime, they comply with US regulations.”
Nikhil: “Then what’s the point?”
Me: “Decentralized versions will come hopefully”
USDC and USDT are systemic risks. They can be weaponized by the governments. Operations choke point already proved regulators don’t always play fair. In many ways, these are invisible CBDCs.
The future of stablecoins must be:
Credibly neutral, not tied to one nation’s debt.
Censorship-resistant, with no freeze switches while still keeping bad actors away.
Low volatility
Should adjust to real time metrics from internet capital markets
All of these are critical when global trade worth trillions of dollars is at stake.
Sources
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