Next-Generation Stablecoins: the ‘Dark Horse’ of Finance

By Matthew Commons, President of the Verified USD Foundation

Stablecoins find themselves at a crucial juncture in their evolution. Despite the setbacks experienced by TerraUSD in 2022, the cryptocurrency market is witnessing a resurgence, marked by a significant rebound in BTC during Q4 and the potential for further gains. At the core of this comeback are stablecoins, which currently represent 8.3% of the cryptocurrency market, with experts predicting the possibility of them becoming a trillion-dollar market by 2030 – the “Dark Horse” of financial markets.

There are compelling reasons why stablecoins are gaining prominence as the next revolutionary application in finance. Active traders find solace in stablecoins as a safe haven amid market volatility, allowing for swift fund movements in and out of positions without the need for fiat currency conversion. Users in emerging economies are also turning to stablecoins, making them attractive to both merchants and consumers seeking to hedge against inflation and create a more predictable financial environment. The integration of stablecoins with on-chain smart contracts further enhances their utility, transforming them into “programmable money” that facilitates automation and transparency.

Despite these advantages, most stablecoins have limitations that hinder their transformative potential. For example, many new blockchains provide low-cost and high-performance transactions, but can only offer “wrapped” stablecoins reliant on cumbersome cross-chain asset bridges with…