Miami Beach – The stablecoin universe, dominated by Tether and Circle, hinders competition that could lead to better product-market fit for some important use cases, according to Ben O’Neill, head of monetary movement at Bridge.
“I think it’s net bad for the growth of stablecoins as a whole, because there are two counterparties that have pros and cons of what they’ve built and the design decisions they’ve made. But they don’t work for every use case,” O’Neill said on a panel on stablecoin growth at Consensus Miami.
Tether’s USDT, with its gigantic market capitalization of approximately $189.5 billion, and Circle’s USDC, which has grown to around $71 billion, each emerged in different generational eras in the evolution of cryptocurrencies.
Tether, launched in 2014 as Realcoin, gained the Chinese export trade, O’Neill said, and built this shadow economy of dollars that people can use without the American financial system. Circle, launched in partnership with Coinbase in 2018, sought to do the exact opposite: a US-regulated stablecoin, which then leaned heavily into decentralized finance (DeFi).
For O’Neill, the prospect of a large payments company, such as Stripe, which owns Bridge, illustrates the shortcomings of the two token giants linked to the dollar.
“As a payments company, I need to be sure how things are going to work,” he said. “So with Tether, they say we will spend 10 beeps, which is incredibly expensive for a payments company, or we can trade on the open market, which means I have no certainty.”
“For Circle, their entire business is AUM, and they keep increasing those burn fees. So again, if I’m someone like Visa, and I want to make trillions of dollars in card settlement and stablecoins, I’m burning a ton of USDC, and that’s going to be net bad,” O’Neill said.
The solution, “which should come pretty quickly in the next few years,” is more stablecoins built for specific use cases, so that they can be optimized for those use cases. The other part is the rise of the clearinghouse, “an attractive topic for founders and venture capitalists” to make the exchange between stablecoins “as efficient as possible,” he added.
Closing his argument, O’Neill said: “More competition is needed, otherwise [Tether and Circle] We are going to continue increasing rates. They are not going to share the performance. They will discourage you from burning it. “They’re going to make it harder and harder to make it feel like money every moment.”
