The Pomp Podcast
#1520 Tarun Gupta | Will Stablecoins Be Bigger Than Bitcoin?
- 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.