The New Landscape of the Stablecoin Market: From Issuance to Distribution

Stablecoins have become an indispensable financial tool in the cryptocurrency space, with a total supply of $240 billion and an annual trading volume exceeding $3 trillion. However, there are some misconceptions regarding their adoption and usage.

Although the market capitalization of stablecoins is large, the actual adoption situation is not as the surface data suggests. Approximately 31% of the trading volume comes from high-frequency operations of MEV bots, and the actual trading volume with human participation is far lower than this. In addition, 99% of stablecoin wallet balances are less than $10,000, while only 20,000 wallets control $76 billion, accounting for 32% of the total supply.

The stablecoin market is shifting from issuance to distribution phase. Early issuers earned huge revenues through reserve yields, but as more participants enter the market, the importance of distributors is becoming increasingly prominent. They control user relationships and experiences, determining which stablecoins receive attention. Circle paid nearly $900 million to partners like Coinbase to promote USDC, exceeding half of its total revenue for 2023.

The main application scenarios of stablecoins include:

1. Centralized Exchange: accounts for 27% of total supply, 11% of total trading volume.
2. DeFi: accounts for 11% of total supply, 21% of total trading volume
3. MEV: Accounts for less than 1% of total issuance, 31% of total trading volume.
4. Unattributed Wallet: Accounts for 54% of total supply, 35% of total transaction volume.

The application of stablecoins in the DeFi sector is mainly concentrated in DEX, lending markets, and collateralized debt obligations. In the future, stablecoins are expected to expand rapidly in real-world payments, remittances, and merchant settlements.

With the improvement of the regulatory framework and the surge of user-friendly applications, stablecoins will experience exponential growth. The future financial world will be defined by the ecosystem formed around stablecoins, rather than the stablecoins themselves. Value will increasingly flow to participants who build applications and infrastructure.