With Bitcoin price surpassing $100K, it’s arguable that 2025 is starting strong for the crypto industry. Regulatory developments in Hong Kong and the United Kingdom, combined with regime change in the United States, could set the stage for more institutional and mainstream adoption of stablecoins.
But what is the long-term outlook? Will stablecoins reach mainstream adoption, and actually prove to be less volatile than other crypto assets?
Sam MacPherson, an experienced member of the Sky (formerly MakerDAO) ecosystem, has provided commentary on what the stablecoin landscape looks like in bull and bear markets. For context, MakerDAO launched the first “decentralized” stablecoin DAI in 2017.
As CEO of Phoenix Labs, Sam is currently contributing to Spark, a subDAO or star in the Sky ecosystem that provides lending solutions to DeFi protocols.
It’s worth noting that stablecoins are a trillion-dollar opportunity, and that is not hyperbole, according to an extensive report from Pantera Capital.
Although crypto is often thought of for its volatility, tokens, and liquidity profile, the report pointed out that the other side of the crypto barbell that “more silently carries the banner” for crypto adoption is stablecoins.
As explained in the update, these are crypto dollars that are pegged 1:1 with their underlying fiat “using either algorithm (less popular) or reserves (more popular) to maintain the peg.”
In 2024, there will be “~$40 trillion cross-border B2B payments made via traditional payment rails” (excluding wholesale B2B payments) (Juniper Research).
Within the consumer payment market, global remittances account for “hundreds of billions in annual revenues.”
And now, stablecoins offer the means by which to make “global, cross-border remittance payments on crypto rails a reality.”
Amidst this more rapid adoption of stablecoins among both B2C and B2B payments, the supply of stablecoins onchain and transaction volume are reaching all-time highs, according to the update.
Our discussion with Sam on these developments is shared below.
Crowdfund Insider: What role do stablecoins play in the crypto industry?
Sam MacPherson: Stablecoins are the grease to the DeFi machine. The vast majority of blockspace involves stablecoins in one way or another. Pegged to another asset, like the US dollar, stablecoins connect the fiat world to the crypto ecosystem, making it easier and more efficient to buy cryptocurrencies and make trades.
But that’s not all they can do. Onchain stablecoins like Sky’s USDS are backed by a basket of assets – including US treasury bills and other crypto assets, which have enabled traders to leverage high interest rates and generate wealth for the DeFi space. Now we are seeing USDS supply surpass 6.5 billion – proving that stablecoins are the killer app of crypto.
Crowdfund Insider: What’s the appeal of stablecoins to institutional investors and mainstream users?
Sam MacPherson: Everyone wants a piece of the crypto pie. Seriously, moving assets onchain brings a number of advantages – transparency, efficiency, decentralization.
As the industry has matured, institutional investors are seeing the value of crypto, and stablecoins are the most important asset in this class. JP Morgan first launched its stablecoin in 2019, and PayPal’s PYUSD launched its own stablecoin more than a year ago.
Stablecoins are the world’s digital currency. For the billions of individuals living outside of the United States, stablecoins offer access to the dollar as an investment and streamlined cross-border payments.
For everyone, stablecoins offer a generalized investment interface, with greater transparency and independence in the case of onchain (decentralized) stablecoins. Stablecoins have long been the gateway to the fiat world, so it makes sense that users who are dipping their toes into the space would begin with this investment.
Crowdfund Insider: What is the value of onchain stablecoins like USDS, the upgraded version of DAI?
Sam MacPherson: Bit of a history lesson here, the Maker Protocol whitepaper was published in 2017, introducing the vision for DAI, a decentralized, unbiased, collateral-backed cryptocurrency soft-pegged to the US dollar.
To put more simply, DAI was the beginning of a journey to put financial power back in the hands of users. Integrating more features of DeFi into the stablecoin’s technology and governance created a new kind of digital asset – the onchain stablecoin.
Now, onchain stablecoins are the investment interfaces of the blockchain era. All interest-bearing dollar products will be packaged into an onchain stablecoin which can be composed with others. This is 21st-century banking. Transparent, highly competitive, and in service of the users.
Crowdfund Insider: Do you see the potential for a Euro-pegged stablecoin to grow in adoption in 2025?
Sam MacPherson: There are a number of Euro-pegged stablecoins on the market, and the progression of MiCA regulation in Europe has paved the way for digital assets. In the future, every asset that can be tokenized will be tokenized, as more players see the benefits of onchain infrastructure.
But as in traditional finance, people gravitate towards a single asset in each category. The US Dollar is still the world reserve currency, and so people flock to this as a store of value both on and off-chain.
Crowdfund Insider: The current market conditions are particularly favorable, how can stablecoin adoption grow in the long term?
Sam MacPherson: Stablecoin adoption in terms of active addresses has only grown even in bear conditions. Circle’s USDC was actually launched during the 2018 bear market.
At this stage, stablecoins will inevitably become widely adopted because of all the benefits they bring to traditional payment systems. Backed by strong fundamentals, stablecoins will blaze the trail for mainstream adoption in 2025 and beyond.