Exploring the Potential of Emerging Blockchain in Stablecoin Adoption

The stablecoin market is growing rapidly and has become an important force in the digital economy, even competing with traditional financial networks. According to research, the total trading volume of stablecoins exceeded $10.8 trillion in 2023. After excluding non-natural trades, the actual trading volume was approximately $2.3 trillion. This reflects an organic annual growth rate of 17% for stablecoins, highlighting their increasingly important role in both retail and institutional finance.

Ethereum has performed particularly well, with a market capitalization exceeding $100 billion at peak times, dominating the entire Blockchain ecosystem. This is closely related to Ethereum's role as a major platform for DeFi and stablecoin issuance. Other Blockchains (such as a certain smart chain, a certain chain, and a certain chain) have relatively low market capitalizations but show stable performance. In particular, a certain chain and a certain smart chain have demonstrated a stable growth trend, highlighting their role as alternative platforms for stablecoins and DeFi.

It is worth noting that the market capitalization of emerging platforms such as certain L2, certain new public chains, and certain L2 is gradually increasing, indicating a growing rate of adoption. This growth trajectory suggests that as these ecosystems continue to mature, they may challenge existing leaders in the future by meeting specific needs or providing competitive transaction efficiency.

Ethereum leads with a stablecoin market value of over $8 billion, reflecting its important role as a major custodial platform for stablecoins. Ethereum's large market capitalization supports its position as a stablecoin hub, with demand primarily coming from DeFi applications and institutional users seeking compliant stablecoins. However, a certain chain has performed impressively as a major competitor, with a stablecoin market value of around $4 billion. The appeal of this certain chain lies in its low transaction fees and fast processing speed, making it particularly popular in high-frequency trading scenarios.

The market capitalization of stablecoins on other chains is relatively small, but they play a key role in the diversified stablecoin ecosystem. For example, the market capitalization of a stablecoin on a certain smart chain is about $2 billion, attracting DeFi projects and retail users looking for lower fees than Ethereum. Smaller blockchains position themselves as niche platforms for stablecoins, often targeting specific use cases such as cross-border payments and microtransactions.

Ethereum: A Solid Leader

Ethereum is often regarded as the cornerstone of decentralized finance (DeFi) and remains the dominant chain for stablecoin activity, with a stablecoin market capitalization exceeding $8 billion. Several factors contribute to Ethereum's leadership in the stablecoin ecosystem:

1. A mature and interconnected DeFi ecosystem: Ethereum's vast and mature DeFi ecosystem includes well-known protocols that heavily rely on stablecoin liquidity in their operations. Stablecoins are crucial for liquidity pools, lending, and yield farming, making Ethereum an indispensable platform for users seeking comprehensive DeFi services.

2. Institutional and regulatory trust: Stablecoins on Ethereum have gained regulatory recognition and institutional trust. As more institutions enter the crypto space, Ethereum's reputation as a secure and decentralized network makes it an ideal choice for compliant, institutional-grade stablecoins.

3. Diversified stablecoins and use cases: Ethereum hosts a wide range of stablecoins, including fiat-backed stablecoins, as well as algorithmic and decentralized stablecoins. This diversity allows Ethereum users to choose the stablecoin that best suits their risk tolerance, regulatory requirements, and preferences.

4. Layer 2 solutions address scalability issues: Ethereum faces scalability challenges, and high Gas fees limit small users' participation in DeFi. However, Layer 2 solutions are significantly reducing transaction costs and increasing throughput, allowing Ethereum to maintain its leadership in stablecoin use cases without sacrificing decentralization.

As Ethereum continues to develop its Layer 2 ecosystem and fully transitions to Ethereum 2.0, its dominant position in the stablecoin market is expected to be maintained. As regulations around stablecoins become clearer, institutional adoption will further grow, potentially leading to more fiat-backed and compliant stablecoins being launched on Ethereum. Additionally, Ethereum's DeFi ecosystem may continue to innovate, developing new stablecoin use cases, including synthetic assets, cross-chain stablecoins, and more complex yield-generating products.

A Public Blockchain: A High-Performance Alternative to Ethereum

A certain public blockchain is often regarded as a high-performance alternative to Ethereum, known for its fast transaction speed and low fees. Although the market capitalization of the stablecoin on this public blockchain is significantly smaller than that of Ethereum, it has successfully attracted a loyal user base and is increasingly popular among retail users and developers seeking low-cost solutions.

1. High-speed low-cost transactions: A unique consensus mechanism of a certain public blockchain supports high throughput and low latency, enabling the network to process thousands of transactions per second at extremely low costs. This makes the certain public blockchain an ideal choice for applications that require frequent transactions, such as micro payments and retail stablecoin transfers. As a result, stablecoins are often used for daily payments and fast transfers within the ecosystem on the certain public blockchain.

2. Integration of Payment and Gaming Applications: A certain public blockchain is positioned as an ideal platform for industries such as gaming and payment, which have high demands for fast and inexpensive transactions. Its user-friendly development tools and support for high-performance applications make it the preferred platform for developers to build decentralized applications (dApp), which are often integrated with stablecoin.

3. Network Stability Issues: Although the high performance of a certain blockchain is a significant advantage, it also faces network interruptions and stability issues. These downtimes lead some users to question its reliability, especially in high-value transactions or institutional use cases. The network resilience of a certain blockchain is still developing, and it needs to address these technical challenges to gain the full trust of the stablecoin and DeFi markets.

4. Cooperation with stablecoin and cross-chain solutions: The collaboration between a certain public blockchain and stablecoin issuers is a key factor in promoting the adoption of stablecoins on the platform. The availability of stablecoins on the certain public blockchain provides users with a reliable dollar-backed stablecoin, enhancing the appeal of the certain public blockchain. Additionally, the certain public blockchain is exploring cross-chain solutions, which will allow assets to flow seamlessly between the certain public blockchain and Ethereum, offering users more flexibility and expanding its influence in the stablecoin market.

A certain public blockchain has significant growth potential in the stablecoin sector, especially if it can maintain network stability and further solidify its position in gaming and retail payments. By continuously collaborating with stablecoins and exploring cross-chain capabilities, this public blockchain is expected to attract more stablecoin transactions and DeFi applications. However, its centralized validator structure and network disruption issues may limit its appeal to institutions unless these issues are resolved.

Key Conditions for Stablecoin Growth

As the appeal of stablecoins continues to grow in the cryptocurrency and financial markets, certain ecosystem characteristics and environments are more conducive to the adoption and growth of stablecoins. These environments not only have technical advantages but strategically meet the needs of retail users and institutional investors. Below are the specific characteristics of blockchain ecosystems that are most likely to experience a stablecoin boom, along with the latest data and trends observed in the market.

1. Low transaction fees

Stablecoin transactions are often frequent and require low latency, especially in scenarios where users rely on stablecoins for everyday transactions, cross-border payments, and remittances. A low transaction fee and a highly scalable ecosystem are more attractive, as they enable cost-effective transactions without network congestion.

In a survey of stablecoin users conducted in 2023, over 60% of respondents indicated that transaction costs are the main factor in their choice of blockchain platforms. The average transaction fee on Ethereum often exceeds $10 during network congestion, while the average transaction fees on networks such as Certain Chain and Certain Smart Chain are below $0.10. This has attracted a large amount of stablecoin migration from Ethereum to Certain Chain, which has captured about 30% of the stablecoin supply, mainly due to its low fees, making it particularly attractive in regions with high demand for cross-border remittances. Additionally, Certain Smart Chain continues to attract retail users to participate in its DeFi ecosystem due to transaction fees that are significantly lower than those on Ethereum.

Providing a low-cost and highly scalable Blockchain environment (such as a certain L2 Ethereum Layer 2 solution and a certain public chain) is also very suitable for the growth of stablecoins. A certain public chain can handle up to 65,000 transactions per second, with lower average fees, especially in payment and gaming applications, where the adoption rate of its stablecoin is gradually increasing.

2. A robust DeFi ecosystem with diverse use cases

The powerful DeFi ecosystem not only attracts stablecoin liquidity but also offers utility that goes beyond simple trading. In an environment with applications such as lending and yield generation, stablecoins serve as a stable medium of exchange and collateral, becoming the core of various DeFi products.

Ethereum hosts over 70% of DeFi applications globally, with stablecoins accounting for nearly 50% of the total locked value (TVL) in Ethereum DeFi protocols. The widespread use of stablecoins is a key reason for Ethereum's leading position in stablecoin adoption, despite its high fees. As of the second quarter of 2024, Ethereum's DeFi locked value is approximately $40 billion, with stablecoins occupying a significant portion.

A certain smart chain also has an active DeFi ecosystem, with platforms such as DEX and lending platforms widely using stablecoins as the foundation for liquidity pools and lending markets. In 2023, the DeFi locked value of a certain smart chain exceeded $5 billion, with stablecoins accounting for about 40% of the liquidity pools. This practicality and the accessibility of the ecosystem further encouraged the adoption of stablecoins.

3. Interoperability

As the crypto space gradually moves towards a multi-chain ecosystem, interoperability has become an important factor for stablecoin adoption. Stablecoins need to circulate seamlessly across different blockchains to meet user demands for trading or holding assets across multiple chains. An ecosystem that enables easy cross-chain transfer of stablecoins will benefit from increased adoption.

According to the 2023 report, cross-chain stablecoin transfers account for approximately 25% of all stablecoin transactions. Solutions like certain cross-chain protocols support the free flow of stablecoins across different chains in the ecosystem, promoting broader liquidity and use cases.

A certain public chain and a certain cross-chain project are two main ecosystems focused on interoperability. A certain cross-chain protocol allows blockchains within its network to interact seamlessly, and stablecoins can also be easily transferred between chains, thereby promoting their adoption within the specific ecosystem. The parallel chain structure of a certain cross-chain project provides similar interoperability, a feature that helps drive the adoption of stablecoins across DeFi and specialized applications.

A certain stablecoin also prioritizes multi-chain issuance, currently supporting Ethereum, a certain public chain, a certain smart chain, and another public chain. By achieving cross-chain compatibility, these ecosystems can enhance the utility of the stablecoin and promote broader adoption.

4. Support regulatory compliance and institutional needs

As global regulatory scrutiny of stablecoins becomes increasingly stringent, compliance has become a key factor in the adoption of stablecoins. Blockchain ecosystems that support compliance requirements, such as KYC and AML regulations, may achieve stronger adoption rates among institutional users and compliant stablecoin issuers.

In 2023, about 30% of the stablecoin inflow on Ethereum was related to institutional trading, which is mainly attributed to