Introduction

Stablecoins are unique digital assets designed to maintain a stable value compared to reference currencies, and have become a key tool for blockchain-based financial development. Stablecoins were first introduced as a tool to mitigate volatility in the cryptocurrency market, but they have now gone beyond their original purpose. Today, they are a core building block of decentralized finance (DeFi)

, act as a reliable medium of exchange for cross-border transactions, and are receiving increasing attention in real-world payment infrastructures.

This report traces the evolution of stablecoins from their fundamental role in the DeFi ecosystem to becoming disruptors of traditional financial services. It explores how their design, business model, utility, and regulations have changed over time. In the process, we aim to fully

understand the current situation and predict how stablecoins may shape the future of digital and global finance.

The core found that

the

1. stablecoin market grew from less than $100M in 2018 to over $250B in August 2025, with USDT and USDC still accounting for the largest share. Starting in 2024, USdE surged nearly

7 times to become the third-largest stablecoin by market capitalization. Together,

2. Ethereum and Tron account for ~ 80% of the supply of circulating stablecoins, highlighting the concentration of adoption by leading networks. Solana has been ranked 3rd in

terms of on-chain supply and supply growth.

3. Tether made $13B in profit in 2024, while Circle reported a profit of $156M, reflecting a different cost structure. We've also seen new stablecoins such as Agora and M0, which are pioneering

platform-centered issuance models that share revenue with ecosystem participants.

4. Stablecoins now account for billions of dollars in DEX liquidity, with Aave deposits of $17.16B (26% of the total), accounting for more than half of Morpho's supply and borrowing, solidifying their role as a DeFi liquidity layer.

5. As of August 2025, 272 DAOs hold a total of $208.3M in USDC, and Arbitrum's STEP 2.0 and other programs demonstrate the positive deployment of stablecoin treasury bonds in yield strategies.

6. Yield stablecoins have grown nearly 12 times since 2024, reaching a supply of $15B+ and distributing more than $900M in revenue; susDE and sUSDS lead the way with 52% market share.

The

7. stablecoin's adjusted transaction volume surpassed Visa at the end of 2024 and processed $2.3T by July 2025. Partnerships such as Stripe-Bridge ($1.1B acquisition) and MoonPay-MasterCard (150M+ merchant access)

are examples of mainstream adoption.

8. In 2025, total capital inflows surpassed $5.5B, including World Liberty Financial's $1.5B treasury bonds, Bullish's $1.15B IPO, and Circle's $1.1B IPO, solidifying stablecoins as institutional-grade infrastructure.

9. The EU's MiCA, the US GENIUS Act, and Hong Kong's stablecoin regulations have established a clear framework, laying the foundation for a new wave of compliant issuers and accelerating mainstream integration.

By 2028, the market is likely to surpass $1.2T, driven by regulatory coordination, a scalable low-cost payment track, and programmable, revenue-enhancing stablecoin designs.

Expert opinion

1. stablecoins are the most important tool in cryptocurrencies. Providing cryptographically native

   synthetic dollars is not only the biggest challenge in this field, but also the biggest opportunity.

   Conor Ryder - Head of Research at Ethena Labs

2. We're seeing the emergence of new financial primitives, and Solana is where the next generation of financial primitives is being built and adopted. With unparalleled speed, low fees, and global reach, Solana is the best infrastructure and default home for stablecoin issuance, distribution, and actual use. Data-driven stablecoin research, such as Birdeye's report

   , will play a key role in shaping the future of the industry with clarity and insight.

   Tamar Menteshashvili

Solana Foundation stablecoin head

3. Stablecoins are playing an increasingly important role in the global financial system. Understanding how the market is evolving can give us a better understanding of its growth

   and the forces that will shape its next phase.

   Ivan Soto-Wright Co-Founder and First CEO of MoonPay

4. Secure stablecoins make money move at T+0 speed, while synthetic money will reshape fixed income. With stablecoins propelling crypto's growth, reports like these offer insights into significant use cases across payments, DeFi, and more

   .

   Anna Yuan

Founder, Perena

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Overview: The stablecoin sector is rapidly expanding, and the total stablecoin market capitalization

has surpassed $250 billion

The

stablecoin industry has experienced exponential growth in recent years, rising from a market capitalization of less than $100 million in 2018 to August 2025 Over $250 billion. Tether's USDT and Circle's USDC together control the largest share of the market, and

Tether has experienced explosive supply growth in recent months.

The most notable development, however, is the rapid rise of USde issued by Ethena Labs. Over the past few months, USdE has become a rising star in the stablecoin ecosystem. Since the beginning of 2024, USdE's supply has grown nearly sevenfold, soaring from $2.8 billion to $14 billion. Amid the explosive surge, new supply of nearly $5 billion was added in the second half of July alone, making USDe the third-largest stablecoin by market capitalization. Although technically closer to a synthetic dollar, similar to USD* or lvlUSD, for the sake of simplicity, this report places USDE under the broader stablecoin

umbrella.

Stablecoins are now embedded in almost every major blockchain ecosystem. Ethereum continues to dominate as the leading platform for stablecoin issuance and activity, and has always accounted for more than 50% of the total stablecoin supply. Tron has become a strong second place, mostly thanks to its high-frequency USDT transactions. Ethereum and Tron together carry

around 80% of the total circulating supply of stablecoins, indicating a clear concentration of adoption.

In third place in the stablecoin supply is Solana, which has quickly become a major contender alongside Ethereum and Tron. Its growth trajectory accelerated dramatically in 2025, and supply increased fivefold from $2.2 billion in January 2024 to reach $11.4 billion by January 2025. Notably, in just one month between December 2024 and January 2025, around $5.3 billion in USDC was minted in the retail frenzy surrounding TRUMP meme coins, adding $6.1 billion

.

When comparing supply changes in major chains, Solana has been ranked 3rd. Solana's stablecoin supply increased by $9.24 billion in 2024, almost the same as Tron's $9.63 billion. In the third quarter of 2025, it was once again in third place, adding $2.11 billion, almost the same as Arbitrum's $2.15 billion. These numbers highlight

Solana's growing position as the third pillar of the stablecoin ecosystem.

Fiat-backed and dollar-linked stablecoins dominate. Stablecoins are traditionally classified according to the nature of their collateral and stabilization mechanisms

. Common categories include fiat support, cryptocurrency support, commodity support, synthetic dollars, and algorithmic stablecoins. However, as the industry matures and innovation accelerates, these boundaries are increasingly blurred. Today, it's not uncommon for a single stablecoin to span multiple

categories, such as a hybrid model with both cryptographic support and algorithms, or even a hybrid model that combines fiat money and crypto collateral.

In this report, we present a taxonomy derived from more than 200 active stablecoins tracked by Birdeye An exclusive data set. To maintain consistency and clarity

, we use a classic classification framework while allowing each stablecoin to appear in multiple categories when showing overlapping characteristics.

Our findings show that crypto-backed stablecoins account for the majority share, accounting for 58.7%, almost double the number of fiat-backed stablecoins. Although crypto-backed stablecoins dominate in numbers, their total market capitalization is still only a fraction of fiat-backed stablecoins. This difference is due in large part to structural differences between issuers: smaller, agile development teams with limited capital usually issue crypto-backed stablecoins, while fiat-backed issuances

focus on institutions that can access large banks and treasury reserves.

Algorithmic stablecoins are still limited in number and market share. Following the collapse of Terra UST in 2022, confidence in fully algorithmic stablecoins declined sharply. As a result, most teams are now opting for a hybrid design that combines cryptographic collateral and algorithmic rebalancing

.

Another useful classification method is pegged currencies. Currently, stablecoins linked to the US dollar dominate, accounting for 77.4% in terms of volume and 99.79% in terms of market capitalization. The Euro (EUR) followed, accounting for 7.8% of stablecoins by volume, and only 0.19% of the total value. The high concentration of exposure to the US dollar highlights the global demand for dollar-denominated digital assets and reflects the continued role of the US dollar as the world's reserve currency.

Business models

Stablecoin issuers generate revenue through a variety of mechanisms, depending on their design structure. Legally backed issuers such as Tether (USDT) and Circle (USDC) mainly earn interest from reserves held by traditional financial institutions. These reserves are usually composed of short-term assets equivalent to dollars or treasury bills, which generate considerable income. As of June 2025, Tether is managing Circle manages $127.1 billion in direct and indirect US Treasury holdings The direct and indirect holdings of US Treasury bonds of $54.1 billion

together surpassed Saudi Arabia's holdings, making it the 17th largest investor in the world.

However, the financial results were in stark contrast. By the end of 2024, Tether was announced $13 billion in profits , solidifying its position as the most profitable stablecoin issuer. In comparison, Circle reported profit of just $156 million and revenue of $1.68 billion. Limited by over $1 billion

in distribution and partner fees.

While they also earn income from interest on reserves, Agora and M0 took a very different path than Tether and Circle. Agora provides a white label platform that allows businesses to issue their own branded stablecoins and share reserve returns with issuers, partners, and liquidity providers to encourage the development of the ecosystem. M0, on the other hand, operates a federated model where licensed miners create tokens backed by compliant reserves, while validators perform governance and distribute revenue and fees to all participants. Together, these models mark a shift from issuer-led approaches such as USDT and USDC to

open platforms for decentralized participation and stablecoin issuance economics.

In contrast, crypto-backed stablecoins show greater diversity in terms of business models and monetization strategies. These issuers tend to innovate at the agreement level and integrate revenue mechanisms, incentive structures, and collateral management systems. These mechanisms, incentive structures, and collateral management systems are very different from issuers supported by

law.

Here's a comparative overview of three prominent crypto-backed stablecoin issuers — two of them, Sky Money (USDS) and Ethena (USDE), currently rank 3rd and 4th in annual revenue, respectively. The third entry is Perena (USD*),

which provides a novel hybrid model that integrates yield liquidity architectures into its stablecoin design.

Stablecoins are the cornerstone of

Defi People are increasingly aware that stablecoins are “killer apps” of blockchain.

In fact, stablecoins, as the main liquidity layer that enables DeFi to scale, have become an integral part of the architecture and growth of decentralized finance. Whether as collateral for loans, margin for derivatives, assets in AMM pools, or the backbone of a DAO treasury, stablecoins support a full range of financial primitives. As protocols become more complex, capital efficiency has become critical, and reliance on stable, liquid, and composable assets such as stablecoins has deepened, solidifying their position at the core of the DeFi financial stack

.

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Core liquidity stablecoins on DEXs are important liquidity anchors

for decentralized exchanges (DEXs) and aggregators, powering same-chain and cross-chain exchanges. On Ethereum, total stablecoin liquidity fluctuated around $2 billion from 2024 to mid-2025, peaking at $2.66 billion on April 24, 2024. Despite this size, stablecoins account for only 2.22% of Ethereum's total TVL as of August 14, 2025. Among them, USDC holds 53.2% of liquidity, USDT holds 33.2%, and DAI

holds 5.8%.

Among Ethereum DEXs, the preference for USDC is particularly evident. According to DeFilLama data, August 2025:

• Curve allocates 11.71% of liquidity to USDC and only 2.68% to USDT.

• Uniswap V3 has a USDC of 12.31% compared to 4.86% of USDT.

• Uniswap V4 has the strongest slope, USDC 19.52% compared to USDT 8.65%.

On both Curve and Uniswap V4, USDC was rated as the top liquidity token, highlighting its dominance in Ethereum-based trading infrastructure.

On the BNB chain, stablecoins play a more prominent role, accounting for 14.2% of the total chain liquidity, compared to 2.2% for Ethereum. USDT is always six times more weighted than USDC in this ecosystem. Meanwhile, the newly launched USD1 experienced explosive growth in 2025. Its market volume began to accelerate in May and soared 30-fold from 500 to 15,000 in August, mainly driven by meme trading activity on four.meme

. The

transaction volume peaked on June 30, when the 0xB1AEC wallet address laundered approximately $2 billion in TAG transactions at a price of ~100K dollars per ticket in the TAG-USD1 currency pair, despite The motives behind this campaign are still unclear

.

A

cross-chain analysis of the USDC and USDT liquidity of the six major networks in the chart above shows that although these two tokens maintained similar levels in 2024, early 2025 The surge in USDC activity on Base has made its total liquidity approximately 20% higher than USDT. The two are still most concentrated on Ethereum, but the distribution varies from chain to chain: USDT dominates BNB, while USDC

is leading on Base and Sui.

With such deep liquidity, it's no surprise that stablecoin on-chain transactions have always topped the list with billions of dollars in daily transactions. On January 20, the total trading volume of USDT and USDC on Solana, Ethereum, BNB Chain, Arbitrum, Base, Sui, and Optimism reached $34.7 billion, mainly driven by USDT-WBNB, USDT-TRUMP, and USDT-USDC currency pairs on BNB Chain. The meme wave on BNB Chain also contributed significantly to USDT trading volume between mid-May and August 2025, resulting in an average daily volume of $7.42 billion.

In addition to being sold, the main collateral in the

lending market

In addition to their role in centralized exchanges, stablecoins also act as core collateral for the lending market. On August 19, 2025, Aave announced more than $6 billion in USDC deposits on its platform. Just a few days later, on August 24, total stablecoin deposits for Ethereum, Arbitrum, and Base hit a record high of $17.16 billion, second only to ETH tokens, accounting for 26% of Aave's total deposits

.

Stablecoins play an

equally dominant role on Morpho, TVL's second-largest lending protocol, according to DeFilLama's data. On August 25, USDC accounted for 52.7% of the total supply of loan assets and 58% of total borrowing demand, highlighting its central position in the credit market. By anchoring supply and borrowing activity, stablecoins enable a broad range of credit strategies: borrowers can release liquidity without liquidating volatile holdings, while lenders receive predictable returns, usually enhanced

by governance token incentives.

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USDC is the second most circulating token of DAO organizations (by number of DAOs) DAOs are increasingly surpassing the era of holding only their native governance tokens

. Today, they are actively diversifying their treasury by converting part of their capital into stablecoins, which are valued for their resistance to volatility, cross-chain liquidity, and versatility. Stablecoins are the medium of choice for managing DAO fees, facilitating grant allocations, compensating contributors, and enabling cross-protocol partnerships

.

According to DeepDAO data, USDC is the second most widely used token (number one is ETH) by the number of DAO organizations. As of August 4, 272 DAOs held a total of $208.3 million in USDC, highlighting its widespread adoption as a trusted reserve asset.

In addition to simply holding stablecoins, DAOs are also becoming increasingly complex in how to deploy idle capital. Many treasury bonds are now allocating stablecoins to yield-generating strategies or pairing them with native tokens on DEXs to guide liquidity

.

One prominent example is Arbitrum's partnership with Steakhouse Financial through the Stable Treasury Donation Program (STEP 2.0) launched in 2025. The plan is to convert a portion of Arbitrum's treasury into profitable stablecoins and allocate them to lending agreements and real-world asset (RWA) vaults. As of August 7, STEP's accrued interest has surpassed $1 million, mainly from BlackRock's BUIDL, Superstate's USTB, and Ondo

's USDY.

Earnings stablecoins distribute 900+ million dollars in earnings stablecoins represent

a rapidly growing subset of the market, and it is stablecoins Use is directly linked to passive income. These tokens usually represent derivative assets minted from staking agreements,

real-world asset vaults, or borrowing strategies, and they automatically accumulate benefits for users over time, making them an ideal choice in environments where capital efficiency is critical.

According to StableWatch data, the supply of yield stablecoins expanded dramatically, from less than $1.5 billion in January 2024 to early September 2025 At a peak of $15 billion, it grew 14 times in less than two years. Cumulatively, earnings stablecoins have distributed more than $900 million in earnings, reaching an average daily dividend of $1.5 million

.

Currently, the market is dominated by susDe (Ethena) and susDe (a rewarded version of USdE) and susDS (Sky Money), a pledged version backed by overcollateralized assets, with a supply of $2.06 billion and an annualized return of ~ 4.50%. Together, they account for 52% of the total market value of yield stablecoins and 50.97% of total payment revenue

.

Stablecoins are expanding the payment circuit Although stablecoins have completely transformed on-chain finance, they are also attracting attention in real-world payments

. In fact, stablecoins are actively reshaping value; they are a form of movement across borders, platforms, and institutions. By combining the programmability of cryptocurrencies with the stability of fiat money, stablecoins provide a faster, cheaper, and more accessible alternative to traditional payment tracks. This is particularly important in a world that requires 24/7, cross-border, and low-cost financial infrastructure

.

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The performance of stablecoins is superior to traditional payment tracks. Stablecoins solve the structural inefficiency problems of traditional payments, such

as slow settlement cycles, high fees, scattered infrastructure, and limited accessibility. Traditional systems such as SWIFT or card networks often involve multiple intermediaries, introduce foreign exchange slippage, and are limited by bank hours or jurisdiction boundaries. By contrast, stablecoins operate on an open, permissionless network, allowing 24/7 finality, programmable logic, and near-zero fees. Here's a detailed McKinsey comparison

:

One of the most notable indicators of stablecoins disruptive momentum is their growing transaction volume compared to traditional payment networks. Starting in 2020, stablecoin transactions continued to surpass PayPal and Remittance, and officially surpassed Visa by the end of 2024. As of July 2025, stablecoin transactions have processed $2.3 trillion, almost double the volume of Visa transactions ($1.3 trillion).

The adoption of

stablecoin payments is accelerating. The adoption of stablecoin payments in institutional and retail channels is accelerating

. Transaction data shows that users are moving from Speculative on-chain activity is shifting to real-world settlements. Artemis reports that between January 2023 and February 2025, stablecoin payments totaled $94.2 billion, with business-to-business transactions leading Liquidity is followed by peer-to-peer transfers, card-linked payments (usually debit or prepaid cards connected to stablecoin wallets), and business-to-customer payments. Fireblocks' findings underscore this momentum: while stablecoin payments currently account for only about 10% of its total transaction volume, the rate of growth is astonishing — from $87 million in early 2021 to $21 billion in mid-2025, nearly tripling

in four years.

This upward trend in adoption is also reflected in institutional sentiment and high-profile corporate initiatives. A Fireblocks' survey of 295 decision makers in traditional finance and crypto services found that 90% are already taking action on stablecoins: 49% are using them to make payments, 23% are in pilot testing, and 18% are in the planning phase. Big tech companies such as Uber, Meta, Apple, X, Airbnb, and Google are reportedly exploring stablecoin

integration.

In February 2025, Stripe completed its biggest acquisition to date: stablecoin platform Bridge for $1.1 billion. Three months later, Stripe launched stablecoin financial accounts, which allow businesses in 101 countries to hold USD-pegged stablecoins and

send or receive them globally through eight blockchain networks.

Recently, on September 4, Stripe and Paradigm announced Tempo, a payments-first blockchain designed to process over 100K TPS with sub-second finality. Tempo becomes the successor to Plasma Stable and Circle's After Arc, the fourth payments-focused stablecoin L1 blockchain was announced this year.

Meanwhile, in May 2025, MoonPay announced a partnership with Mastercard to launch a Mastercard directly linked to stablecoin settlement. This integration allows stablecoins to be consumed at over 150 million merchant locations around the world and instantly converted to fiat at the point of sale. The program is powered by Iron and Helio's API infrastructure (acquired by MoonPay in early 2025), and also supports cross-border payments and payments, covering gig pay, merchant settlement, and everyday global commerce. The stablecoins that can be spent include USDG, PYUSD, and USDC, with two other plans to launch before the end of the year: FIUSD, issued by Fiserv on Solana using Paxos and Circle infrastructure; and nbsp; mUSD, developed by MetaMask using Bridge and M0 on Ethereum and Linea

.

On the retail side, innovation across the entire payment stack is booming, and Solana is high due to its nearly zero fees It has become a preferred destination due to its throughput and high stablecoin trading volume. These benefits enable a seamless Web2-like user experience and minimize payment friction. As of August 2025, there are 26 apps and 14 infrastructure projects on Solana focused on payments, 40%

of which run entirely on-chain.

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Stablecoin investments are breaking records

. Driven by growing institutional validation and payments-centric infrastructure, the stablecoin ecosystem is seeing huge capital inflows. The following table summarizes, in chronological order

, the most significant investments over $100 million this year.

These investments mark a turning point for stablecoins: from speculatively traded assets to the backbone of a regulated, scalable global payment and settlement system.

Regulation as a catalyst for application Regulatory clarity plays a key role

in achieving mass adoption of stablecoin payments.

• Contrary to the ambiguous treatment of tokens in many jurisdictions, stablecoins are now subject to a dedicated regulatory framework: Europe's MiCA (Crypto Asset Market) regulations place clear licensing requirements for stablecoin issuers, making the EU the main stablecoin-friendly administration of justice Jurisdictions.

• In July 2025, the US passed the GENIUS Act (“Guiding and Establishing National Innovation for US Stablecoins”), the first comprehensive federal regulatory framework dedicated to payment stablecoins. The bill was passed by both houses of the Senate and the House of Representatives with support from both parties, and signed into law by the President.

• Hong Kong's Stablecoin Ordinance came into effect on August 1, 2025, establishing a licensing system for fiat reference issuers requiring full reserve support, strict risk control, and redemption rights. The initial license is expected to be issued in early 2026

, with only a “small number” of approvals initially.

The GENIUS Act explicitly prohibits the issuance of profitable stablecoins, strengthening their role as a payments-focused instrument rather than an investment instrument. Deloitte notes that the framework introduces multiple licensing channels to enable a wider range of entities, including non-banking institutions, to become issuers. This regulatory clarity is expected to trigger a

new wave of market entrants and cultivate a more diverse and competitive US stablecoin ecosystem.

Summary Stablecoins

have evolved from simple volatility hedging to blockchain ecosystems The system's “killer apps” underpin DeFi infrastructure and ever-expanding real-world payment use cases. Their integration with lending markets, derivatives, DAOs, and yield instruments has made them an integral part of on-chain finance, while the growing popularity of merchant payments, payrolls, remittances, and mobile money marks a steady shift towards mainstream financial relevance. Stablecoin market capitalization could reach by the end of 2028, according to Coinbase data $1.2 trillion

.

Looking ahead, the next phase of growth has three trends:

(1) regulatory coordination in major markets, which will open doors for banks, fintech companies, and new non-bank issuers; (2) expansion of multi-chain, low-cost payment tracks to make stablecoin transactions as seamless

as card payments; (3) programmable and

Earnings have boosted the rise of stablecoins, enabling new forms of automated commercial and financial services. If these trends stay consistent, stablecoins

will not only continue to be the foundation of DeFi, but they will also be the dominant force reshaping the way value flows around the world.

Special thanks