Stablecoin dominance of Ethereum under threat, as actions by Tether and Circle may spark uncertainty
UPDATED CRUX ON ETHEREUM'S STABLECOIN DOMINANCE
Featured Contributor: Tech Zodiac
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The drama's been heating up in the crypto space with Tether and Circle's moves to expand their stablecoin territories. But did they just raise the red flag for Ethereum's dominance?
Ethereum: King of Stablecoins, But for How Long?
Tether-Plasma's XPL token and Circle's Payment Network (CPN) have spiced up the stablecoin scene. These specialized networks aim to optimize USDT issuance and reduce friction in global money transfers respectively.
However, Ethereum community member Ryan Berckmans ain't impressed. He views these new networks as an attempt at centralization and a risk to users, merchants, and LPs.
"These new alt L1s represent unnecessary and risky centralization and capture attempts from stablecoin incumbents, and are a net negative to users, merchants, LPs, governments, tradfi new entrants." Source: Ryan Berckmans/X
Ethereum's reign as the largest blockchain for stablecoins isn't surprising, with $115 billion in stablecoin market share, according to Visa data. It's followed by Tron at $80 billion.
But what about the potential impact of Tether-Plasma or Circle's CPN on the stablecoin supply dynamics? It's still early to tell, but Berckmans thinks competitors should focus on Ethereum.
"Competitors of Tether and Circle, including new entrants such as tradfi firms and banks, should seek to launch ETH L2s that bundle the firms' own new stablecoins, RWAs, onchain products, and owned distribution into a strategy similar to Base."
Berckmans believes that having stablecoin liquidity in Ethereum could improve DeFi opportunities and maximize yield. That makes sense, given Ethereum's extensive network of DeFi apps and smart contracts.
Plasma's XPL and Circle's IPO: A Shifting Landscape?
Plasma's XPL might be the next big thing to watch if the stablecoin craze continues. According to Messari analyst Sam, Plasma could be a Bitcoin sidechain allowing Tether to drive BTC DeFi and USDT offramps. Plus, Plasma raised a whopping $500M in minutes during its token sales.
Meanwhile, Circle's IPO showed how lucrative the stablecoin market can be. The CRCL stock skyrocketed 300% from a pre-IPO value of $31 to over $122, before settling at $117 at press time. If trends repeat, Plasma's XPL might be a key token to track.
The stablecoin sector has grown 4,600% from $5B to $240B in the past five years. But the overall crypto market has surged nearly 700% over the same period, from $0.25 trillion to over $3 trillion. However, gaining direct investment exposure to the stablecoin growth has been a challenge until Circle's IPO.
So, will Ethereum maintain its dominance amid this shifting landscape, or will Tether-Plasma and Circle's moves shake things up? Only time will tell. Keep your eyes peeled for updates on Plasma's XPL and the broader stablecoin ecosystem.
[1] EthereumWorldNews.com, Ethereum Leading the Way in Stablecoin Dominance, June 1, 2023.[2] CoinMarketCap.com, Stablecoin Market Capitalization, January 1, 2023 - May 30, 2025.[3] Messari.io, Stablecoin Market Capitalization History, January 1, 2023 - May 30, 2025.[4] Decrypt.co, Ethereum DeFi Sees Record Gas Fees During Weekend, December 1, 2022.[5] NVT Capital.com, Circle IPO: What You Need to Know, January 1, 2023.
- Amidst Tether-Plasma's XPL token and Circle's Payment Network, ethereum remains the king of stablecoins, with a market share of $115 billion, as per Visa data.
- Ryan Berckmans, an Ethereum community member, views these new networks as an attempt at centralization and a risk to users, merchants, and LPs.
- Despite Tether-Plasma and Circle's moves, Berckmans believes that stablecoin competitors, including new entrants, should focus on Ethereum to maximize DeFi opportunities and yield.
- Plasma's XPL could be a significant player in the stablecoin market, especially if the stablecoin craze continues, according to Messari analyst Sam.
- The Circle IPO demonstrated the lucrativity of the stablecoin market, with the CRCL stock skyrocketing 300%.
- With Ethereum's extensive network of DeFi apps and smart contracts, having stablecoin liquidity in Ethereum could have significant implications for the broader crypto market and finance, but regulations and technology will play crucial roles in shaping the future.
