Stablecoins continues to become a pillar of the world of cryptocurrencies and the global financial system. The market has already exceeded $ 235 billion, showing that people have faith in the future of these assets.
Currently, two stablecoins backed by USD (USDT and USDC) have approximately 90% of the market. The rest of the 10 main, including USDE and Pyusd, are all called in dollars. Stablecoins based on euros have little market share compared. Why is that?
There are many discussions about regulation, interoperability and integration with tradfi. However, the most important factor is liquidity. Without deep and sustainable liquidity, no stable can gain mass traction, and no amount of regulatory clarity will change that.
What is the problem with the notable not USD?
Let’s take the euro as an example. The stable backed by EURs have existed for years at this time, but they are barely used. This is mainly due to liquidity challenges. That is what finally determines whether a stable can become a widely used financial tool.
For years, the stable backed by USD as USDT and USDC have been the dominant force in this landscape, acting as the main source of liquidity in loan pools and negotiation pairs. The stable backed by USD have deep liquidity, high volumes of negotiation and extensive integration into CEFI/DEFI platforms.
In contrast, euro stable (and others not USD) suffer a lack of market mechanisms that could sustain them. There are simply not enough commercial pairs, users and financial instruments built around them to create an adequate liquidity ecosystem such as what the USD stable.
One of the key reasons for this liquidity gap is that centralized market manufacturers do not see enough financial incentives to provide liquidity for euro stable. It is simply not profitable enough for them. Therefore, other assets prioritize, leaving Stablecoins backed by EUR in the background.
This is not just a matter of preferences: it is a more fundamental issue that is economic. If market manufacturers cannot obtain a decent performance to provide liquidity for these assets, they will not assign capital to them.
So how can this be changed?
Is the key regulation or simply a side factor?
It can be argued that if other jurisdictions advance in terms of establishing clear rules, the stablecoins that are not USD will become much more attractive. The introduction of Mica regulations in the EU, for example, has raided the way for the EUR support stable that they fulfill as ERC, making them an increasingly viable alternative to consider when integrating with tradfi.
To some extent, I agree. As several jurisdictions worldwide continue to advance towards a better regulation of digital assets, we can expect very well that more established are linked to local currencies that begin to arise. In Asia, the Middle East, Latin America, regions that would be inclined to use these assets to improve their financial stability. In addition to that, it would also help them reduce dependence on the US dollar.
In fact, we have support examples here, such as the XSGD of Singapore or the XCHF of Switzerland. Hong Kong also launched a stablecoin with HKD rays in December 2024. The trend seems clear.
However, regulation alone is not the decisive factor. The EUR support stable existed before Mica appeared. And it is not yet clear if the frame will finally help or hinder its long -term adoption. Mica could act as a kind of “restriction” in Stablecoins backed by USD in Europe. Potentially, this gives Euro Stablecoins an unfair advantage instead of making them really competitive for their own merits.
And at the end of the day, regulation cannot resolve the most fundamental issue of liquidity. Without it, no regulatory framework can make a stablecoin viable enough for broad use. So, the question is: how can we create liquidity for the stable that are not USD?
Address liquidity restrictions
To put things in perspective, the USDT market capitalization and the USDC stands at $ 141 billion and $ 56 billion, respectively. In comparison, the stable based on euros such as ERC or Eurs barely exceed $ 100 million. The gap is obvious, and directly affects its usability. That is less commercial couples, less defi integrations and, ultimately, less incentives for merchants and institutional players to adopt them. As a result, they cannot become conventional assets.
There could be a case for the EURE, which personally uses a lot and I consider that it is the most convenient eurocoin euro for the application of the real world. Even so, the broader market of stablcoin does not yet face the same challenges: limited adoption, less integrations and a long way to go before they can compete with counterparts backed by dollar.
A possible solution lies in the development of more effective liquidity algorithms for non -USD stables. The dependence on professional market manufacturers has proven ineffective, so a new approach is necessary, with mechanisms that can guarantee strong liquidity without depending completely on those parts.
A more effective approach, in my opinion, would be to first establish deep liquidity groups between USD and non -USD stable. This is the most practical way of guaranteeing soft conversions, since it would directly address the central problem. But it requires refine automated market manufacturer (AMM) algorithms so that the provision of liquidity is more efficient and attractive to suppliers.
The path to the viable USD stables
What matters most is how much liquidity suppliers can win. If the incentives are there, the liquidity will improve and the adoption will follow naturally. It is not just attracting more capital, it is about restructuring the provision of liquidity in a way that guarantees long -term and sustainable profits.
Without improvements in the infrastructure, Euro Stablecoins and their counterparts will continue to delay, despite their potential. The stables are as strong as their liquidity. The key is to build models that make it provide liquidity to be profitable, because once the financial incentives align, everything else will fit.
Looking to the future, I can see that the stable that are not USD obtains a competitive advantage in specific use cases, such as cross -border remittances, chain foreign exchange trade and decentralized loans. Companies that operate worldwide but need to manage cash flows in multiple coins could benefit when borrowing stables no USD while maintaining their treasure bonds in USD.
In addition, the liquidity groups that facilitate stable swaps between different fiduciary denominations could serve as value stores, potentially establishing the bases for a more decentralized global financial system.
