RootData Roundtable: Development, Challenges and Opportunities of Stablecoins

Compiled by: Scof, ChainCatcher

Against the background of the booming global encryption market, stablecoins, as a bridge connecting the traditional finance and blockchain worlds, are becoming an industry hot spot. Represented by PayPal's PYUSD and XRP stablecoins, more and more institutions and companies are beginning to deploy the stablecoin market and explore the potential and opportunities in this field. In this discussion, multiple guests from Perena, IOSG VC, Frax Finance, BiXin Ventures, Plume Network and OKX comprehensively analyzed the future development of stablecoins from the market impact of stablecoins, institutional investment opportunities to innovative technology applications direction. At the same time, the topic extended to trends such as AI agents and RWA, and discussed how new technologies can help blockchain and DeFi achieve large-scale user adoption.

You can listen to the entire discussion here:

https://x.com/RootDataCrypto/status/1875149495287324898

Ray :

Hello everyone, my name is Ray from ChainCatcher. The topic we want to discuss today is the future direction and opportunities of stablecoins. Recently, the market is in the deep stage of the bull market, and various stablecoins are receiving more and more attention. For example, XRP launched its own stable currency, PayPal launched PYUSD, and many large institutions and projects are also stepping up their layout or announcing the creation of their own stable currency. For example, PayPal has cooperated with BlackRock, USDT and other family funds, and traditional institutions are deeply accelerating their integration with the crypto world.

Today I am honored to invite several guests to discuss the topic of stablecoins. We will start with the self-introduction of each guest. Please briefly introduce yourself and your project.

Shina :

Hello everyone, my name is Shina, from Perena, I am very happy to communicate with you. I'm mainly responsible for growth and design at Perena. Perena is the stablecoin infrastructure on Solana. It has launched a number of products to provide support for efficient token exchange and liquidity provision on Solana.

Henry：

Hello everyone, I am Henry, from IOSG, mainly responsible for investment and research. Recently, I have been paying attention to the stablecoins in the Ethereum ecosystem, and I am also learning about the Solana ecosystem, such as the perena mentioned by Shina just now. I am quite optimistic about their team and development prospects. In addition, we are also investigating other stablecoin infrastructure, as well as opportunities to integrate stablecoins with payments.

Jae : ​
Hello everyone, my name is Jae, from Frax Finance, responsible for business development. Recently we released our Frax 2030 vision and announced our partnership with BlackRock. Our core USD-pegged stablecoin Frax will likely be renamed frxUSD, and the governance token FXS will also be renamed FRE, around mid-January. For the sake of consistency, I still use the terms Frax and FXS today. I very much look forward to sharing my thoughts with you all in this discussion.

Vivi :

Hello everyone, I am Vivi from BIXIN Ventures and serve as the head of marketing. We have recently incubated a public stablecoin payment chain called BenFen, and we are happy to share some ideas here.

Shukyee :

Hello everyone, my name is Shukyee and I come from Plume Network and serve as Chief Strategy Officer. I joined Plume last June. We are building a chain for Arbitrum+DeFi. We have recently completed Series A financing and also held a pre-deposit event for our pledge protocol NEST. Everyone is welcome to pay attention.

Kiwi:

Hi everyone, I’m Kiwi from OKX Ventures. I am in charge of the research team here, and I am very happy to communicate with you!

Ray : There have been many new trends in the stablecoin market recently, such as PayPal’s PYUSD and XRP’s stablecoins. What do you think about the impact of the emergence of these new stablecoins on the entire market structure?

Shina :

For us at Perena , the rapid growth of the stablecoin market over the past year is a very positive sign. This shows that the decentralized stablecoin infrastructure we are building is meeting market demand. With the launch of new stablecoins, such as PayPal ’s PYUSD and XRP ’s stablecoins, and even Sky USD in the Solana ecosystem, the issuance of these stablecoins is growing rapidly. For example, Sky USD has minted more than 100 million on Solana. USD stablecoin. This is an important development and validates the rapidly increasing market demand for digital assets with stable prices, rather than speculative assets.

In addition, we observe that blockchain technology is gradually being adopted by the mainstream market. Especially PYUSD , because it is backed by a credible financial institution, I think this will bring a large number of new users to the stablecoin ecosystem and help prove to more people the practical application value of stablecoins and encryption technology.

Regarding the XRP stablecoin, I think this is a very interesting development. It is based on XRP Ledger and shows innovative potential in the field of cross-border payments. In particular, it uses a different blockchain than the Ethereum and Solana blockchains where current mainstream stablecoin liquidity is located. This differentiated choice makes me full of expectations for its future development.

Shukyee :

Stablecoins play a vital role in the blockchain ecosystem. We have always believed that stablecoins are the key bridge to promote the transition of users from Web2 to Web3. Compared with other on-chain applications, stablecoins provide users with a smoother on-chain experience, effectively lowering the threshold and becoming a model for traditional financial users to enter DeFi.

At Plume, we have established partnerships with multiple stablecoin projects, including PayPal's PYUSD, Mountain, Zero, and Athena. We believe that stablecoins can not only be used as income-generating assets on the chain, but also become an important tool in the payment field in the future. We also plan to launch Plume’s own stablecoin as an important asset in the ecosystem.

There are also many interesting trends emerging in the market, such as the rise of some government-backed stablecoin projects, such as the Hong Kong Monetary Authority’s Project Sela. At the same time, some large traditional companies have also begun to enter the encryption field and launch their own stablecoins, such as the stablecoin project released by JD.com, and some communications companies are exploring similar directions. These trends show that stablecoins are becoming a core tool connecting the traditional finance and blockchain worlds.

It can be said that this year will be a key development year for RWA and stablecoins, and stablecoins will be one of the most important tools.

Jae : ​

I totally agree with the views just mentioned. As our founder Sam said, stablecoins are a market with great potential. The entry of giants shows that they are very confident in the future of stablecoins. The launch of stablecoins by typical Web2 payment companies like PayPal did not happen overnight, but after long-term demonstration and preparation. It also provides a model for other Web2 companies.

PayPal can be said to be a typical Web2 company. Their launch of stablecoin was not a spur of the moment, but the result of years of careful consideration. Their PY USD shows that every L2 ecosystem needs a strong stablecoin to support its development. PayPal has hundreds of millions of accounts and a huge number of actual active users. Their willingness to enter this new field and compete with decentralized projects is a very optimistic sign in itself.

There is a joke in our community that we not only want to attract DeFi profit hunters, but also attract “grandmas” to join the chain, because we are developing a simpler and easier-to-use UI to make DeFi easy to get started. This is why our stablecoin has been transformed from Frac to Frax USD, with the goal of driving large-scale users to join the chain.

I think that as companies like PayPal enter the market, other Web2 companies will follow suit. The addition of these traditional companies to the stablecoin market signals greater development and change in this field.

Henry:

From an investor's perspective, the rapid growth of the stablecoin market is mainly attributed to the increase in liquidity mining demand and various trading activities, especially asset transactions between ecosystems such as Ethereum and Arbitrum. I believe that high demand for liquidity mining is the main factor driving the expansion of the stablecoin market.

In addition, the market demand for high-yield, scalable and stable financial products has also increased significantly. All products that can provide stable and scalable income are the key to the current market pursuit, which is also an important reason why the demand for stablecoins continues to grow.

At the same time, I have also paid attention to the development of the CDP (collateralized debt position) market. At present, some decentralized stablecoins are one of the few truly decentralized products in the market. However, these decentralized stablecoins are facing certain pressure in the market due to strong competition from other players in the stablecoin space.

Overall, growth in the stablecoin market is driven by revenue, while decentralized stablecoins need to find better ways to gain a foothold in a competitive market. This is my observation and opinion on the current market.

Vivi:

I also think that the launch of PayPal PYUSD and XRP stablecoins shows that market demand is very strong, and large companies have entered, indicating that stablecoins have become an important segment of the encryption market and even financial technology. Coupled with the gradual shift in regulatory attitudes in the United States, more and more policymakers are becoming more open to crypto innovation. Some experts predict that the market value of stablecoins may reach US$400 billion or even higher in 2025.

We at Bixin Ventures have also participated in this wave and launched Layer 1 as a stablecoin-based payment. The goal is to provide a blockchain payment solution that is faster, safer, and easier to use than traditional Swift.

Ray : Okay, let’s ask another question: As the integration of traditional finance and encryption deepens, what opportunities do you think stablecoins can bring to institutional investors? This may be more of an investment perspective, so I would like to ask a few guests with research or investment backgrounds to speak first.

Henry:

In my opinion, the most attractive thing for investors at present is still the stablecoin with revenue as its core. These stablecoins can create high returns in a variety of ways, such as using different collaterals or running algorithmic systems. As long as they can generate significant returns, such stablecoins are worth investing in. I am personally particularly optimistic about projects that have the potential to generate revenue in innovative ways.

In addition, I am also paying attention to some stablecoin issuance and its infrastructure projects, such as M0. These infrastructures can serve as a bridge between traditional institutions and the encryption field, providing support for institutions and enterprises to enter the encryption ecosystem.

Finally, interest rate products are also an important direction. For example, interest rate products like Pendle make a lot of sense in the current market. They can be used both as speculative tools and for hedging risks, further enriching the application scenarios of the stablecoin ecosystem.

To sum up, the three main directions that investors are currently paying attention to are: income-focused stablecoins, stablecoin issuance infrastructure and interest rate products. As for regulated fiat-backed stablecoins, I feel they are less attractive to investors because they are relatively conservative and unattractive. This is my view on the current market.

Kiwi :

Yes, I think stablecoins have the potential for collaboration and development in many aspects, here is my take:

1. Shared liquidity:

Stablecoins enable fast and low-cost transfers of funds and are important to multinational companies, whether for legal or other purposes. This kind of liquidity sharing helps improve the efficiency of global funds and promotes more companies to enter the blockchain field.

2. Driving enterprise adoption:

We have recently communicated with many companies and found that they are very interested in stablecoins. Many companies hope to build their own stablecoin ecosystem and use stablecoins for transactions and payments. This is critical to their business, as stablecoins can significantly improve transaction efficiency and reduce costs.

3. Regulatory and financial integration:

Stablecoins can also be deeply integrated with the traditional financial field, such as the tokenization of financial products, which has attracted a lot of attention, especially in the liquidity market. For example, the use of stablecoins makes it easy to manage assets and provides new tools for investing, which represents a significant opportunity for financial market participants.

In general, stablecoins are not only key tools, but also an important bridge between blockchain and traditional finance. I think it will play a bigger role in the future, here are some of my observations and opinions.

Jae : ​

Yes, I'm not a member of a research organization or an investment firm, but I can share some observations from a regular consumer's perspective:

In South Korea, stablecoins do offer many opportunities. Due to the current unstable domestic political situation in South Korea, such as frequent presidential impeachments and changes, the exchange rate of the Korean won has been affected and has become increasingly weaker. As a result, some Koreans began to buy other fiat currencies, such as the Japanese yen or the U.S. dollar, as hedging tools. They will then exchange these foreign currencies back into Korean won after the exchange rate changes, similar to a short-term investment strategy.

For those familiar with DeFi, they will choose to use stablecoins to hedge the risk of currency fluctuations. Not only is this more convenient, but you can also earn further profits by depositing your stablecoins into money markets like Frax Finance or other platforms. Therefore, these users can take advantage of stablecoins on multiple levels.

As for the regulatory environment in South Korea, each country’s policies are indeed different. In South Korea, there is a relatively cautious attitude towards cryptocurrencies and stablecoins in general. Exchanges in South Korea are often reluctant to list stablecoins developed by local teams, which makes the promotion of local projects in the domestic market more difficult. At the same time, institutional investors who want to do business in South Korea also need to deal with cumbersome compliance requirements and overcome numerous regulatory obstacles.

In general, although stablecoins have many potential opportunities in South Korea, their promotion and application still need to overcome many challenges due to the market's regulatory attitude and policy environment.

Ray : The next question is about income-based stablecoins. What are their potential advantages over traditional stablecoins? Guests are invited to share their views, focusing on the differences in regulation, compliance and application.

Shukyee : As a member of the Plume team, we have been communicating with many traditional business owners, traditional institutions, and asset issuers, and are committed to putting these assets on the chain so that they can be converted into RWA on the chain. In this process, a key question we face is: what kind of crypto capital can be used to pay for or invest in these on-chain assets. This is not only an issue that needs to be considered by the chain itself, but also a challenge that the entire ecosystem and retail users need to face.

1. About the asset side :
   We have high flexibility on the asset side. At present, the tokenization standards of assets are becoming more and more mature, and many compliance and legal teams are also providing third-party services to help traditional asset issuers successfully get on the chain. This makes the asset on-chain process smoother and more efficient.

2. Regarding the capital side :
   The challenges on the capital side are more complex. Currently in the process of connecting Web2 and Web3 (TradFi and DeFi), many traditional asset issuers are unable to accept most crypto assets. For example, while stablecoins (such as PayPal's PYUSD, USDC and USDT) are widely accepted in the payment sector, they are currently mainly used as payment instruments rather than investment vehicles.

At Plume, we are working hard to partner with different capital types. For example, although many asset issuers were initially reluctant to accept USDT , through our efforts we gradually pushed them to accept it. In addition, we are also promoting the issuance of some new stablecoins on Plume, and these stablecoins may also be recognized by some asset issuers in the future.

Two development paths :

1. Only as an on-chain payment tool : Stablecoins can be used only as a payment tool for on-chain transactions to meet the basic needs of the on-chain ecology.
2. As a bridge for users to get on the chain : Stablecoins can not only be used as payment tools, but also become an important bridge to attract more Web2 users into the Web3 world.

Our goal at Plume is to lower the threshold for both Web2 and Web3 so that they can work closely together on the same platform to promote RWA on-chain. This openness allows us to seize new opportunities and continually explore more efficient solutions. That's my opinion.

Ray : From an investment perspective, what are the key factors to consider when evaluating stablecoin projects?

Jae :

Market acceptance is a very important factor when considering stablecoin investment. Stablecoins need to be widely recognized in the market and have actual use value in order to become a project worthy of investment. For example, whether it can be used to split accounts with friends, shop on overseas e-commerce platforms (such as Shopify), or be a generally accepted payment tool, all of these directly affect its value. Only a stablecoin that is trusted and viewed as truly equivalent to the U.S. dollar can dominate the market.

In addition to market acceptance, the functionality and profitability of stablecoins are also crucial. From an investment perspective, projects that allow users to earn more by holding or using tokens are more attractive. For example, whether stablecoins can generate high returns or use them as investment capital to achieve more value-added uses determines investor interest. In addition, for ordinary users, the convenience of using stablecoins is also the key to evaluation, such as whether stablecoins can be a reliable choice when paying daily expenses.

Overall, the market position and functional value of stablecoins are not only crucial for professional investors, but also have a profound impact on ordinary users who use cryptocurrencies on a daily basis. Choosing a stablecoin that is influential and widely accepted in the market is the key to realizing long-term investment value.

Shina :

Okay, although we are not investors in stablecoins, but a project focused on stablecoins, I very much agree with the importance of market influence mentioned by Jae. On this basis, I would also like to add a key point, which is the liquidity of stablecoins.

A major concern for many investors holding large amounts of capital (e.g. millions) is whether they can withdraw funds from the protocol at any time and whether they will be limited by liquidity when using a certain stablecoin . The current trend is for more and more types of stablecoins to be issued on the chain, but this may also lead to further fragmentation of the stablecoin ecosystem. More issuers and more stablecoins could mean fragmented market liquidity, increasing the need for interoperability between stablecoins.

The interoperability of a stablecoin, that is, the ease of exchange between stablecoins, and its acceptance in different trading media directly determines its trust and appeal among investors. This interoperability and liquidity issue is also a focus that we at Perena are actively solving. We hope to provide a convenient liquidity access point for issuers who want to put their assets on the chain through stablecoins by aggregating the stablecoin liquidity of future issuers. Under this mechanism, issuers can not only quickly obtain liquidity support, but their stablecoins can also be more easily accepted and traded by investors.

Therefore, I believe that liquidity and interoperability are two core indicators that cannot be ignored when considering stablecoin investment. This not only affects the exit convenience of investors, but also determines the sustainable development and attractiveness of the entire stablecoin ecosystem. This is my take on the topic.

Henry:

From an investment perspective, there are several key metrics to focus on when evaluating stablecoin projects:

First, the governance mechanism is the foundation. Whether a stablecoin project has a complete governance system directly affects its long-term stability and sustainable development. Governance is not only about the transparency of stablecoin management, but also about investor trust.

Secondly, we will focus on the actual application rate, which is the degree of adoption of stablecoins. For example, if a stablecoin can be used in multiple ecosystems, such as being widely used in Layer 2 or DeFi protocols (such as Aave or Pendle), then its market acceptance and competitiveness will be stronger. This wide range of application scenarios reflects the market influence of stablecoins.

• Anchoring stability is a core consideration. Whether a stablecoin can always maintain a stable relationship with an anchored asset (such as the U.S. dollar) is the basis for its survival. Failure to restore anchoring in a timely manner in the face of market volatility will be a major blow to investor confidence.

Next, we evaluate the rate of return. In addition to traditional stablecoins such as USDT and USDC, many emerging stablecoins attract investors by providing returns. If the yield is less than 3%-4%, we may have doubts about the attractiveness of the project, as this yield is not enough to stimulate investment interest.

Finally, we consider market positioning and competitive landscape. If competition in a certain market is too fierce and there are too many participants, it may lead to fragmented liquidity and waste of resources. In this case, we usually avoid entering this area.

Taken together, these indicators help us more comprehensively evaluate the investment potential of a stablecoin project, while also helping us avoid projects that are riskier or less attractive. This is the basic analytical framework for stablecoin investment.

Ray : OK, thank you! In addition to the just-mentioned evaluation of stablecoin projects as investors or users, there are many hot tracks and topics currently on the market that have attracted our attention. For example, what are your views on hot trends such as AI Agent or RWA? We can use this as a brainstorming topic, not just for stablecoins.

Shina has just answered my question. If possible, I hope you can further introduce the relevant content. This is currently a free discussion session, everyone is welcome to speak freely!

Shukyee :

From Plume's perspective, as a chain, if it wants to become a leading chain in the RWA and DeFi fields, it must first become an open chain. This means we need to keep an open mind to all types of DApps. For example, for AI Agent and Meme Coin, we have been exploring with different developers and teams.

Regarding the AI ​​agent, we believe that it can serve as an overlay to help users better participate in the Pl ecosystem, such as guiding users to perform liquidity mining or obtain income. Meme coins can be seen as some kind of reflection of the real world, so there is no doubt that they will become part of the ecosystem. Of course, initially we will focus on bringing traditional financial (off-chain) assets onto the chain (on-chain) to serve DeFi users, but in the long run, many new trends will emerge.

As a chain, we always maintain an open attitude and are willing to work with any developers and teams to jointly explore the possibility of introducing new trends into the Plume ecosystem.

Andy :

Hello everyone! I'm Andy, and thanks so much for having me join this discussion. Let me first introduce myself briefly. I am currently responsible for the ecosystem and strategy at Frax Finance, and I am also involved in a project called IQ. I was very interested in the discussion I heard today, so I wanted to share some of our developments and thoughts.

First of all, regarding the hot topics we mentioned, I would like to focus on the IVM technology stack (IVM Tech Stack) that Frax is building. This is a brand new consensus mechanism - a consensus system based on "Proof of Insurance". This mechanism uses AI and machine learning models to verify transactions on the blockchain network. We believe that this technology will enable AI Agents to become fully autonomous in the future, eliminating the problem of single point control, thereby enabling seamless collaboration between AI and blockchain.

In addition, the IQ project will soon launch an "Agent Tokenization Platform" called IQ ATP. Currently, there is a lot of discussion about AI agents in the market, but we believe this is just the beginning. Many people may view AI agents as a tool similar to reply bots or earning social points, but we hope to combine it with DeFi utility. This will be an important opportunity to promote breakthroughs in stablecoins and DeFi use cases, because currently DeFi still has a high learning threshold.

Imagine that with the help of AI agents or AI, the process of investing in DeFi can become as simple as buying meme coins on Solana. A transaction that originally required 10 operations may only be completed in 1-2 steps. This will not only greatly reduce the difficulty for users to get started, but also attract more users to enter the field of encryption and blockchain.

We are developing a platform on Frax’s L2 network, combined with the IVM technology stack, to allow users to create and use AI agents. These AI agents can not only be used for entertainment, but also provide practical DeFi and encryption use cases, thereby promoting the development of blockchain technology and ecosystem.

In short, we hope that through these technologies and platforms, we can combine the potential of AI agents with the practicality of DeFi, so that encryption and blockchain can truly reach the masses. This is what I want to add to this current topic. Thank you for your attention!

Ray : Okay, thank you Andy for sharing. So do you have any suggestions about future stablecoin development or projects like Frax Finance? For example, if you have any ideas or suggestions for other projects in the Frax ecosystem, you can share your views.

Andy :

I think one of the biggest challenges we face when Frax is responsible for the strategic level work is how to make it easier for the public to enter the DeFi field. This is actually a common problem with many DeFi protocols, as the learning curve required to understand DeFi is very steep. For example, in Frax, users need to understand the lending mechanism, AMO (algorithmic market operation), the difference between stablecoins, such as Frax USD, USDC, USDT, etc., and what are fully endorsed stablecoins and partially endorsed stablecoins. This complex information can be really difficult for the average user to digest.

Even at the UI and UX level, existing designs can make users feel complex and confusing, thus affecting user experience. So my personal view is that we need to streamline these processes. While I can't provide clear recommendations for other projects, at Frax our vision is to achieve this through our upcoming 2030 strategic plan . Specifically, by 2025, we hope to lower the threshold for new users to enter DeFi by optimizing user experience.

We realize that it is not enough to just provide documentation and products and let users learn and operate them themselves. This approach does not effectively drive user growth. Therefore, our goal is to allow users to participate in revenue opportunities with a simple action, such as one or two clicks. Once users see that they are getting real benefits from these opportunities, they will be more willing to explore and learn more, and then integrate into the entire ecosystem.

In our opinion, the key point of this breakthrough will be AI Agent. AI agents can help users automate complex processes, such as selecting revenue opportunities, optimizing strategies, etc., thereby truly simplifying and attracting more users into the DeFi field. This will not only improve user experience, but also bring more growth opportunities to the entire ecosystem.

Ray :

Thank you everyone for sharing. This concludes this discussion, and we hope that the exchange of insights will continue in the future.