Stablecoins continue to become a pillar of both the world of cryptocurrencies and the global financial system. The market has already exceeded $ 235 billion, which shows that people trust the future of these assets.
Currently, two stablescoins supported by the USD (USDT and USDC) have around 90% of the market. The rest of the Top 10, including the USDE and the Pyusd, are all denominated in dollars. Stablecoins based on the euro have few market share in comparison. Why then?
There are many discussions on regulations, interoperability and integration with Tradfi. However, the most important factor is liquidity. Without deep and lasting liquidity, no stable can gain mass traction, and no amount of regulatory clarity will change this.
What is the problem with non -USD stablescoins?
Take the example of the euro. Stablecoins supported by EUR have existed for years at this stage, but they are barely used. It is mainly due to liquidity challenges. This is what ultimately determines if a stablecoin can become a widely used financial tool.
For years now, stablescoins supported by the USDT and the USDT and the USDC have been the dominant force in this landscape, acting as the main source of liquidity in loan swimming pools and trading pairs. The stablecoins supported by the USD have a deep liquidity, high trading volumes and extended integration on the CEFI / DEFI platforms.
On the other hand, the stables of the euro (and other non-USDs) suffer from a lack of market mechanisms that could support them. There are simply not enough pairs of trading, users and financial instruments built around them to create an appropriate liquidity ecosystem like what the USD stablecoins have.
One of the main reasons for this liquidity gap is that centralized market manufacturers do not see enough financial incentive to provide liquidity to the stablescoins Euro. It is simply not profitable enough for them. They therefore favor the other assets, leaving stablecoins supported by EUR on the retro-cooking.
It is not only a question of preferences – it is a more fundamental question of economic nature. If market manufacturers cannot make a decent return on the supply of liquidity to these assets, they will not allocate their capital.
So how can it be changed?
Is regulation the key or simply a secondary factor?
An argument may be advanced that if other jurisdictions take front in terms of establishing clear rules, stablescoins not USD will become much more attractive. The introduction of Mica regulations in the EU, for example, paved the way for stables -co -compliant with EUR such as EURC, transforming them into an increasingly viable alternative to consider during integration in Tradfi.
To a certain extent, I agree. As various jurisdictions worldwide continue to progress towards better regulation of digital assets, we can very well expect more stablecoins fixed to local currencies to start. In Asia, the Middle East, Latin America – regions that would be inclined to use these assets to improve their financial stability. In addition to what, this would also help them reduce the dependence of the US dollar.
We actually have examples of support here, such as the Singapore XSGD or XCHF in Switzerland. Hong Kong also launched a HKD Stablecoin in December 2024. The trend seems clear.
However, regulation alone is not the decisive factor. The stablecoins supported by EUR existed before the arrival of the mica. And, it is not yet clear if the frame will ultimately help or hinder their long -term adoption. Mica could act as a kind of “restriction” on the staboins supported by the USD in Europe. Potentially, this gives Euro stablecoins an unjust advantage rather than making them truly competitive on their own merits.
And ultimately, the regulation cannot resolve the most fundamental question of liquidity. Without this, no regulatory framework can make a stablecoin viable for wide use. So the question is: how can we create liquidity for non-USD floors?
Approach liquidity constraints
To put things in perspective, the market capitalization of the USDT and the USDC amounts to $ 141 billion and $ 56 billion respectively. In comparison, stablecoins based on Euro like Eurc or EUR exceed barely $ 100 million. The pure gap is obvious and it has a direct impact on their conviviality. It is fewer trading pairs, fewer skills in challenge and, ultimately, less incentive for traders and institutional actors to adopt them. As a result, they cannot become general public assets.
A case could be made for Eure, which I personally use a lot and that I find the most practical stable euro for a real application. Despite this, the wider market of stablecoin non -USD is always faced with the same challenges: limited adoption, less integration and a long way to go before being able to compete with dollar -supported counterparts.
A possible solution lies in the development of more effective liquidity algorithms for non -USD stablecoins. The dependence on professional markets has proven to be ineffective, so a new approach is necessary, with mechanisms which can ensure strong liquidity without counting entirely on these parties.
A more effective approach, in my opinion, would first be to establish deep liquidity pools between the stablescoins USD and not USD. It is the most practical way to ensure fluid conversions, because it would directly address the basic problem. But this requires refining automated market manufacturer algorithms (AMM) to make liquidity supply more efficient and attractive for providers.
The path to stablescoins non -usd viable
What matters most is the amount of liquidity providers can win. If the incentives are there, liquidity will improve and adoption will naturally follow. It is not only a question of attracting more capital – it is a question of restructuring the supply of liquidity in a manner which guarantees long -term sustainable profits.
Without improving the infrastructure, the stables of the euro and their counterparts will continue to late, despite their potential. Stablecoins are as strong as their liquidity. The key is to build models that make the supply of liquidity profitable – because once the financial incentives line up, everything else will be set up.
For the future, I can see stablescoins non -usd win a competitive advantage in specific use cases, such as sending of cross -border funds, chain trading and decentralized loans. Companies that operate globally but need to manage cash flows in several currencies could benefit from the borrowing of non -USD stables while keeping their Treasury bills in USD.
In addition, liquidity pools which facilitate the exchanges of stabbing between different Fiat confessions could serve as value reserves, potentially laying down the basics of a more decentralized global financial system.
