We often talk about stablecoins as if they are one market. They aren’t.
CoinDesk recently highlighted a striking gap: while the US dollar is used roughly three times more than the euro in the traditional economy, onchain that gap is more than 300 to 1. Euro-backed stablecoins still represent less than 1% of total stablecoin supply.
That’s particularly interesting when you consider the euro is the world’s second largest reserve currency.
Dollar stablecoins such as USDT and USDC have had a significant head start. Crypto markets were largely built and priced around dollars, so dollar liquidity, lending and DeFi infrastructure developed around them.
But Europe is beginning to catch up. Euro stablecoins reached a new all-time high in August, growing more than 68% year-on-year, while MiCA is helping create a clearer regulatory framework for euro-denominated digital money.
This raises a bigger question: If more payments, investments and financial markets move onto blockchain infrastructure, could the currencies that establish themselves onchain early gain an advantage?
The next currency race may not just be happening between central banks, interest rates and foreign exchange markets. It may also be happening onchain.
Source/inspiration: CoinDesk — Inside the 300-to-1 onchain gap between the dollar and euro