The Best Ways to Participate in the Stablecoin Wave

The global demand for the US dollar is experiencing explosive growth. Over 4 billion people and millions of businesses are actively seeking to obtain US dollars through stablecoins, representing the largest expansion of the dollar's network effect in decades.

This has created unprecedented opportunities for Ethereum. Stablecoins provide individuals worldwide with access to dollars—growing 60 times since 2020, exceeding $200 billion. These new dollar holders not only need digital cash but also require yields, investment opportunities, and financial services. Traditional finance struggles to serve this massive new market due to regulatory and infrastructure limitations.

Ethereum has unique advantages that can provide global financial infrastructure for this emerging digital dollar economy, and ETH will directly benefit from this growth.

Stablecoins Bring Millions of New Dollar Holders

There is a huge potential demand for the US dollar from individuals and businesses worldwide.

People around the world hope to secure safety with the US dollar:

• Over 4 billion people face significant currency risks.
• 21% of the global population lives in countries with an annual inflation rate exceeding 6%.
• For these people, holding US dollars means financial security.

Businesses need US dollars to conduct transactions:

• The US dollar remains the dominant currency in global trade, with 88% of foreign exchange transactions involving the dollar on at least one side.
• Emerging market companies rely on US dollar liquidity for international payments, imports, and supply chains.
• Small and medium-sized enterprises and freelancers increasingly need digital dollars to receive payments and avoid currency mismatch risks.

For the first time in history, anyone in the world can hold US dollars through stablecoins:

• Anyone with internet access can hold and trade US dollars.
• Since 2020, the market value of stablecoins has grown 60 times.
• The peak concentration is in emerging markets that were previously excluded from dollar-denominated finance.

Stablecoins are creating a new class of dollar holders among the largest population groups globally—businesses are pricing in stablecoins, and households are saving in stablecoins. They are driving a fundamental expansion of the dollar financial services market.

New Dollar Holders Seek Returns, Giving Rise to New Global Financial Infrastructure

Stablecoin holders want their money to work.

Today, millions of people can hold US dollars through stablecoins. But their aspirations go far beyond this. Individuals and businesses naturally wish to use their funds to earn returns, invest, and grow their wealth.

Traditional finance cannot serve this new market:

• The U.S. banking system requires compliance with regulatory requirements, excluding most global participants.
• Cross-border financial services remain expensive, slow, and geographically restricted.
• Traditional finance is built for institutions and high-net-worth individuals, not for global retail.
• Geographic and regulatory barriers hinder billions of dollars from participating in dollar-denominated financing.

This has created a demand for new financial infrastructure that can serve billions of stablecoin holders worldwide, allowing them to utilize new dollars.

Ethereum Meets the Service Needs of Global Stablecoin Holders

The new financial infrastructure designed to serve stablecoin holders must meet three key requirements:

1. Globally available
2. Safety for institutions
3. Resist government intervention

Ethereum meets all three requirements:

• Globally Accessible: Anyone in the world with an internet connection can use Ethereum 24/7.
• For institutional security:
  • Security - The most economically secure and decentralized among all programmable blockchains.
  • Reliable—able to maintain 100% uptime for 10 years regardless of market crashes or geopolitical events.
  • Complies with regulatory requirements - US regulators classify ETH as a commodity, providing a clear regulatory framework.
  • Customizable - The Ethereum L1+L2 framework enables customization, allowing institutions to optimize for specific use cases and meet regulatory requirements.
  • Outstanding performance record - Home to the world's largest digital financial economy.
• Resist government intervention: Governments cannot seize a single control point to control or restrict the network.

Ethereum uniquely meets these requirements with its strong decentralized features:

• Over 1 million validators are spread across more than 100 countries.
• Multiple independent development teams ensure resilience and the largest open-source developer ecosystem.
• Due to the community-funded initiation and the origin of proof of work, asset ownership is widespread.

There are no other alternatives that can meet all three requirements at the same time.

ETH: The Reserve Asset of the New Digital Dollar Economy

With billions of dollars flowing through stablecoins on Ethereum, participants need a secure, permissionless, and efficient asset to support lending, staking, and yield generation. ETH has a unique advantage in this regard:

• Scarce and trustworthy: The supply of ETH is predictable, with low inflation and not subject to central control.
• Productive: ETH generates returns through staking
• Utility of Collateral: ETH is already the largest on-chain collateral asset in the Ethereum ecosystem.
• Anti-seizure and anti-censorship: ETH cannot be frozen or seized by the government
• Programmable and highly liquid: ETH is deeply integrated into the entire on-chain financial system.

As more and more users hold stablecoins and require financial services, they need a reserve asset to support these activities. ETH can earn yields, secure the network, and support DeFi lending—therefore, as the system evolves, the demand for ETH will naturally grow.

In short: more adoption of stablecoins → more on-chain activities → more demand for ETH as collateral → institutions and users holding more ETH.

The growth of Ethereum Layer-2 has further stimulated the demand for ETH. By reducing transaction costs, speeding up transaction times, and enabling new use cases, Layer-2 has opened up more areas where ETH can be used as collateral.

ETH: A Potential Global Store of Value

The growing demand for ETH has also led it to occupy a large share of the traditional value storage market:

• ETH and BTC will not compete with each other, but may share a piece of the $5 trillion traditional SoV asset in the coming years.
• In addition to having the SoV properties of Bitcoin, ETH also provides yields for its holders.
• Yield generation is a major benefit, as investors generally prefer income-generating assets.

Conclusion: Hold ETH to Participate in the Stablecoin Economy

The growth of the stablecoin economy has created a strong flywheel for Ethereum and ETH. As more stablecoins are utilized on Ethereum, the demand for ETH has also increased. Higher ETH value and a more secure network attract more institutions and services, further promoting the adoption of stablecoins.

The alternatives face significant challenges in replicating this flywheel:

• Traditional finance cannot serve the billions of people excluded due to geographical and regulatory barriers.
• Government-controlled systems are still subject to political influence and jurisdictional limitations.
• Bitcoin lacks the programmability of complex financial services
• Other blockchains lack the security, reliability, and customizability required by institutions, and also lack the decentralization to resist government intervention.

The result is: holding ETH may be the simplest and most effective way to access the growing stablecoin economy.

• You can also choose to invest in specific DeFi protocols that benefit from the expansion of stablecoins. However, this carries a higher risk and requires expertise.
• For most retail and institutional participants, ETH provides the easiest entry point into the entire digital dollar ecosystem.

Risks Worth Noticing

Like any emerging global system, Ethereum also faces significant risks:

1. The US dollar becomes a reserve asset, rather than ETH
2. CBDC competition replaces the adoption of the US dollar stablecoin
3. Competitive chains surpass Ethereum

Despite these risks, Ethereum still has strong advantages and development potential.