#1520 Tarun Gupta | Will Stablecoins Be Bigger Than Bitcoin?
4/2/2025 · 29 min · transcript via mlx
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Key topics
— Stablecoins have emerged as critical infrastructure for money movement on-chain, with USDC and USDT dominating 94–95% of a $200 billion market by enabling fast, low-risk settlement and reconciliation compared to traditional banking rails.
— Yield-bearing stablecoins (such as Athena and Sky, now at $6–8 billion) represent the next evolution, allowing users and institutions to earn returns on reserves previously kept idle by traditional stablecoin issuers.
— CoinShift's CSUSDL is backed by Paxos-issued USDL and collateralized by Abu Dhabi Treasury bills, offering a 5.2% yield composed of risk-free T-bill rates (4%) plus lending yield from Morpho protocol.
— Yield sources come from two channels: lending protocols (real demand from borrowers) and delta-neutral strategies (tokenized hedged positions), each carrying distinct risk profiles requiring careful collateral management.
— Regulatory divergence is widening: the US restricts yield distribution to end-users, while Abu Dhabi and offshore jurisdictions actively embrace yield-bearing instruments using sovereign reserves.
— Stablecoins are projected to reach trillions of dollars in the next five years as traditional finance and DeFi migrate to on-chain settlement, with subsequent growth in credit instruments and yield products.
Market & price signals
— CSUSDL has reached $37 million in AUM since launch on January 7th, with expectations to cross $70 million within two weeks; institutions including Ember Group and GSR have already placed CSUSDL on their balance sheets. Current yield offered is 5.2% (4% from Treasury bills, remainder from lending protocol yield). USDC is at approximately $60 billion, USDT exceeds $100 billion, and projected stablecoin growth is "trillions of dollars" over the next five years post-regulation.
Actionable insights
— Institutional investors seeking low-risk stablecoin alternatives with regulatory backing should evaluate yield-bearing instruments like CSUSDL, which combine sovereign reserve backing (Abu Dhabi T-bills) with immutable lending protocol governance (Morpho) and depositor veto rights (7-day time lock).
— Understand that yield-bearing stablecoins carry compounded risks across multiple layers: issuer trust, lending protocol smart contract risk, collateral liquidity risk, and liquidation risk in market downturns; diversification across lower-risk instruments (T-bill-backed) versus higher-risk strategies (delta-neutral) is essential.
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