Positioning of stablecoin rise in 2025

Author: Abdul; Translated by: Block unicorn

In the past year, the issuance of stablecoins has increased by $100 billion, and it is expected to grow tenfold in the coming years. With major players from traditional finance (TradFi) entering this space, many are still uncertain about how to seize this opportunity.

With the growth in demand, various types of stablecoins will expand—whether centralized issuers like Tether and Circle, or decentralized protocols like Ethena and MakerDAO.

Historically, Tether has always been the biggest winner, accounting for 60% of all stablecoin issuance (through USDT). In 2024 alone, it earned a profit of $13 billion. However, since Tether is a private company, there is no direct investment avenue. Fortunately, many other issuers have tradable tokens.

At the same time, some of the world’s largest financial institutions and governments are also betting on stablecoins. Trump’s stablecoin strategy could provide a significant boost to the industry this year. If this momentum continues, 2025 may become the most important year for stablecoins in history.

Even Tether’s CEO (Paolo) is looking forward to the stablecoin wars of 2025. Now is the time to position accordingly.

Increase Attention to the Growth of Stablecoins

You can directly gain growth in stablecoins by owning the issuer of tradable tokens, or indirectly gain growth by benefiting from the adoption of stablecoin protocols.

Direct Contact

The most obvious way to engage with the growth of stablecoins is through some issuers that have active tokens. Below, I will review some key players.

Ethena

Ethena issues USDe, which is the largest synthetic yield-bearing stablecoin. It mints USDe by building delta-neutral positions on assets such as Bitcoin and Ethereum, generating yields from staking rewards and perpetual funding rates.

The circulation of USDe is approximately 7 billion USD, with a year-on-year growth of 350%. Ethena has become an important player in the stablecoin space. Its native token $ENA serves as both a utility token and a governance token within the ecosystem.

Sky (formerly known as Maker)

Sky (formerly Maker) is one of the oldest protocols in DeFi and is the issuer of USDS (formerly DAI), which is the largest CDP-based stablecoin. Although the supply of DAI is migrating to USDS, the current total issuance of the protocol is $8.5 billion. Its governance token $MKR is used for protocol governance.

Ondo

Ondo Finance is a leading tokenization platform for real-world assets (RWA), focused on bringing traditional financial assets on-chain. Its stablecoin product USDY is a tokenized representation of U.S. Treasury bonds, designed to provide a yield-bearing and fully backed digital dollar.

USDY is experiencing rapid growth, with a circulation of approximately 600 million USD, a year-on-year growth of 1000%. Ondo is positioned at the intersection of traditional finance and DeFi, making it one of the key players in the RWA space.

The native token of Ondo, $ONDO, plays a role in governance and protocol incentives, aligning the interests of token holders with the long-term growth of the platform.

Frax

Frax Finance is the issuer of the FRAX stablecoin, which was initially partially algorithmic but later transitioned to being backed by RWA and crypto assets.

The protocol expands its stablecoin products through sFRAX, a yield-bearing version of FRAX backed by government bonds, making it an important player in the on-chain RWA space. Frax has issued over $1 billion and remains one of the most innovative decentralized stablecoin issuers.

Its governance token $FXS accumulates value through protocol revenue and governance rights, aligning holders with the long-term growth of Frax.

Indirect Contact

As the stablecoin war intensifies later this year, the competition to establish foundational liquidity will drive more activity towards the largest stablecoin use cases in DeFi. Here are some less obvious projects that will benefit from the growth of stablecoins.

Aave

Aave is the largest lending protocol in DeFi, and with the increasing adoption of stablecoins, it will benefit significantly as stablecoins are the backbone of the lending market. A higher issuance of stablecoins means more liquidity flowing into Aave’s pools, which reduces borrowing costs, increases deposit yields, and enhances protocol revenue through interest rate differentials.

In addition, as competition among stablecoin issuers intensifies, many issuers will offer incentives to deepen liquidity, further driving the usage of Aave. With its multi-chain presence and dominant position in DeFi lending, Aave has the ability to capture the surge in lending activity driven by the expansion of stablecoins.

$AAVE is the native governance token of the Aave protocol.

Bonus: Aave has also directly benefited from stablecoin demand through its stablecoin GHO, which has a $200 million issuance, up 50% since the beginning of the year.

Curve

Curve is also a key player in DeFi, closely related to the rise of stablecoins. As the preferred decentralized exchange for stablecoin swaps, Curve will greatly benefit from the surge in stablecoin adoption. Since stablecoins make up a large portion of its liquidity pools, an increase in issuance will directly boost Curve’s TVL (Total Value Locked), while also enhancing the platform’s efficiency and reducing trading slippage. This results in more trading volume, more fees, and thus increases the protocol’s revenue.

$CRV is the native governance token of Curve, and its value benefits from the increase in platform usage.

Additional benefits: Curve has also launched its native stablecoin crvUSD, which provides additional exposure to the growing demand for stablecoins while offering extra incentives for liquidity providers.

Pendle

Pendle is a DeFi protocol for tokenized yield-bearing assets that allows users to separate principal and yield for more efficient trading and optimization. With the growth of stablecoin adoption, Pendle benefits by unlocking more liquidity for stablecoins, driving more trading volume and higher protocol revenue.

With the increasing demand for stablecoins, Pendle’s model will capture a larger share of the DeFi market, providing users with the ability to maximize stablecoin returns. $PENDLE is its native governance token, benefiting from this expansion.

Morpho

Morpho is a protocol that enhances decentralized lending by optimizing interest rates and liquidity. With the growth of stablecoin adoption, Morpho will benefit from the increased demand for borrowing, as stablecoins bring liquidity into its pools, providing better rates for borrowers and lenders.

As more stablecoin liquidity flows into the DeFi space, Morpho’s unique model will become more attractive. $MORPHO is the governance token of Morpho.

Fluid

Fluid (formerly known as Instadapp) is a DeFi platform that integrates lending and trading functionalities to enhance capital efficiency. Its innovative “smart collateral” and “smart debt” features allow users to simultaneously use assets as collateral for borrowing and liquidity for trading, while earning fees from both lending and trading.

By providing a seamless integration between lending and trading, Fluid attracts more stablecoin liquidity, thereby reducing borrowing costs and increasing user returns. The Fluid protocol is governed by its native token $FLUID.

Special Mention: Tron

If we don’t mention Tron ($TRX), we can’t conclude this section. The Tron blockchain holds 50% of the USDT issuance. Last month, Tron generated over $50 million in fees through stablecoin transfer activities.

Stablecoins are considered a killer use case for cryptocurrencies, but most people have not ventured into this field since the largest stablecoin issuer (Tether) is a private company. I hope this article provides you with some ideas on how to position yourself in the explosive growth of stablecoins in the future.