Minister Bessent paves the way for 34,000 trillion USD to flow into DeFi through stablecoin.

U.S. Treasury Secretary Scott Bessent has publicly supported USD-pegged stablecoins, laying the groundwork for a massive capital flow of up to 34 trillion USD into decentralized finance protocols (DeFi) such as Ethena, Ether.fi, and Hyperliquid.

In the article dated August 27, Arthur Hayes stated that Bessent is planning to redirect capital flows from the $13 trillion Eurodollar system and $21 trillion in retail deposits in Southern Hemisphere countries to stablecoin infrastructure, which uses these funds to purchase U.S. Treasury bonds.

According to Hayes, this strategy addresses two issues simultaneously: the difficulty in monitoring the flow of Eurodollar capital and the demand for finding government bond buyers that are "price insensitive."

Minister Scott Bessent## Stablecoin – a tool to strengthen the power of the USD

Bessent's plan also leverages American social media platforms as distribution channels to promote the use of stablecoins. For example, WhatsApp could integrate a cryptocurrency wallet for billions of global users, allowing direct transactions with stablecoins without the need for local banking systems.

Stablecoin issuers are required to invest deposits in Treasury bonds to maintain the exchange rate with USD, thereby creating stable demand for government debt. For example, Tether is currently enjoying a net interest margin of 4.25% – 4.5% from holding T-bills, while not paying interest to USDT holders. This model grows in parallel with the scale of deposits, providing the Treasury with a pool of investors to purchase short-term debt without being affected by price fluctuations.

Bessent can "weaponize" the power of the USD to force international organizations to accept stablecoins. Hayes cites that, in a financial crisis, America could threaten to remove foreign banks from the Federal Reserve's swap line (Fed). This would cause the flow of Eurodollars to be forced to shift to the stablecoin platform regulated by the US.

Hayes predicts that the total supply of stablecoins could reach 10 trillion USD by 2028, and in this scenario, three protocols will benefit greatly.

The top three protocols in trends

Ethena (USDe): Functions as a synthetic USD system, generating profit by taking short positions in cryptocurrency derivatives against long positions. Currently, Ethena holds a TVL of 12.4 billion USD. Hayes forecasts that USDe could capture 25% of the stablecoin market share, equivalent to a supply of 2.5 trillion USD.

Ether.fi: Provides stablecoin spending utilities through an integrated Visa debit card, allowing users to make payments at any Visa-accepting location. The revenue model of Ether.fi has a rate equivalent to JPMorgan with a 1.78% fee on deposits, while also having significant potential as the USD stablecoin market expands.

Hyperliquid: Dominating the decentralized derivatives trading space with 63% market share. This platform processes daily trading volumes equivalent to 26.4% of the total circulating supply of stablecoins.

According to Hayes, with a forecast of 10 trillion USD in stablecoins in the future, the way these three protocols are linked to stablecoins will bring significant benefits to the ecosystem as well as their native tokens.

However, Hayes is also an early investor at a very low price in these 3 platforms, leading to a significant bias in his prediction reports. Readers should consider this as a reference only.

Chu Nguyên Chương