Stablecoin supply hits record high: which investment strategies will benefit?
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Stablecoin supply hits record high: which investment strategies will benefit?
The most attractive investment opportunities may come from new infrastructure, consumer applications, and yield-generating products that have yet to emerge, as novel tokens often attract greater market attention.
Navigating Web3 tides with focused insightsAuthor: Ignas
Translation: Tim, PANews
The total supply of stablecoins has reached a new all-time high, growing 44% over the past two years.
Which investment strategies will benefit from the widespread adoption of stablecoins?
For context, the Trump administration has set August as the deadline for passing a stablecoin bill.
Amid this trend, mainstream traditional financial institutions are actively entering the stablecoin market. A few examples include:
Bank of America: Open to launching its own stablecoin if regulations allow
Standard Chartered: Plans to launch a Hong Kong dollar-pegged stablecoin
PayPal: Expanding its PYUSD stablecoin into new markets in 2025
Stripe: Acquired Bridge, a stablecoin infrastructure platform, for $1.1 billion
Revolut: Exploring the possibility of issuing its own stablecoin
Visa: Integrating stablecoins into its payment systems and global business network
In the past, increases in stablecoin supply often led to higher cryptocurrency prices, as these stablecoins were typically held short-term for speculative trading.
Today, stablecoin use cases have expanded beyond speculation. For example, SpaceX uses stablecoins to repatriate Starlink sales revenue from Argentina and Nigeria, while AI company ScaleAI pays overseas contractors using stablecoins.
The simplest investment strategy is to bet on sectors where major institutions may issue new stablecoins.
Ethereum, Base, Tron, and Solana are currently the primary blockchains for stablecoin issuance.
Notably, although SOL has dominated this bull market, stablecoin growth on Solana has been relatively slow. Currently, only Base has successfully entered the stablecoin race, thanks to USDC.
Since Base itself does not have a native token, shares of Coinbase (NASDAQ: COIN) could become a proxy investment vehicle.
Another strategy is to wait for Circle—the issuer of USDC—to go public, or invest in stocks like Visa and PayPal.
Beyond transactions and payments, stablecoins are also used to generate yield in DeFi:
Therefore, if stablecoin supply continues to expand, mature DeFi protocols may become key beneficiaries:
- Aave / Morpho / Euler / Fluid
- Uniswap / Curve
- Maker
- Ethena
Increased stablecoin supply → Higher on-chain TVL → Rising protocol fee revenues → Increased token valuations (especially for tokens with revenue-sharing mechanisms)
Yield is a critical factor influencing stablecoin market dynamics:
For example, PayPal’s PYUSD is now available on both Solana and Ethereum, but its growth remains sluggish.
Solana previously challenged Ethereum's dominance by incentivizing stablecoin deposits through high yields on the Kamino protocol, which temporarily boosted stablecoin supply. However, that growth soon stalled, while Ethereum’s stablecoin supply continues to rise steadily.
Cross-chain platforms and oracles will benefit from multi-chain stablecoin expansion due to increased transaction volume and fee income:
- Chainlink
- LayerZero / Socket
- Debridge / Across, etc.
However, the most attractive investment opportunities may come from yet-to-be-launched infrastructure, consumer-facing applications, and yield-generating products—new tokens often attract greater market attention.
Once crypto prices recover, the "super narrative" around stablecoins will fully unfold. This will be an area I (as an enthusiastic researcher) plan to dive deeper into.
Regardless, mass adoption of stablecoins is extremely bullish for the crypto market:
Demand for blockspace on smart contract platforms such as Ethereum, Solana, and Base will surge dramatically. Therefore, betting on smart contract blockchains remains the most fundamental investment strategy.
What’s your preferred investment strategy?
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Ignas | DeFi Research
