Crypto Projects Shift Focus to Stablecoins

Crypto projects are transitioning from altcoins to a focus on stablecoins, with the supply surpassing $230 billion. This shift marks a notable change in the industry.

The crypto landscape appears to be moving toward a “stablecoin season” as supply continues to rise, reaching new highs nearly every week. This increase in stablecoin volume can be attributed, in part, to the leading stablecoins such as Tether (USDT) and Circle’s USDC.

Changpeng ‘CZ’ Zhao, founder of Binance, has observed that there are now more launches of stablecoins compared to altcoins. Many new startups are adopting synthetic or asset-backed stablecoins in their efforts to develop liquidity.

> “I see more stablecoin startups than alts. 😂”
> — CZ 🔶 BNB (@cz_binance) March 21, 2025

The specific valuations for both major and minor stablecoins fluctuate with each new launch, but the total supply is estimated between $229.4 billion and $236 billion, significantly supported by USDT and USDC. Additionally, Binance has introduced FDUSD, a centrally controlled stablecoin, to enhance liquidity across its trading pairs.

Smaller stablecoins have exhibited rapid growth in supply, especially during market recoveries.

Types of Stablecoins

Stablecoins now exist in three categories:
1. Market leaders: USDT and USDC
2. Large-scale stablecoins: Such as DAI, linked to DeFi protocols.
3. Newer assets: Numerous small stablecoins with lower liquidity.

The rising trend of stablecoins may enhance the use of existing assets and spur the creation of new stablecoins that serve multiple purposes.

The Potential for a Stablecoin Season

The crypto market is currently saturated with various tokens and altcoins, many of which can lose substantial value very quickly. This has motivated new projects to focus on developing stablecoins, often emulating the strategies of larger players.

Data from Artemis reveals that 42 minor stablecoin projects have collectively raised around $6.4 billion.

The total number of stablecoins in circulation is close to 300, predominantly dollar-denominated, but also includes assets tied to precious metals and other currencies.

Anticipation is growing for a stablecoin season as new projects aim to provide DeFi functionalities and potentially passive income.

However, not all stablecoins are created equal. Currently, approximately $10.9 billion is tied up in over-collateralized stablecoins, which carry significant risk amidst market volatility.

Algorithmic stablecoins represent the highest risk category, with a reported supply of only $800 million on Ethereum and represent a smaller subsection of the market’s total value.

Concerns linger that the stablecoin sector could experience a crisis similar to the Terra (LUNA) incident, where overvalued collateral led to unsustainable practices.

Moreover, liquidity fragmentation poses a challenge, with new stablecoins often creating isolated ecosystems, complicating trading opportunities. Some require long holding periods before users can redeem their value, while others may operate in illiquid decentralized frameworks.

The Dollarization of the Crypto Market

Stablecoins have effectively dollarized the crypto market, centering around the USD as the primary accounting unit.

Chinese media have highlighted the potential spillover effects of U.S. financial risks on the crypto market, advocating for a shift towards local currencies such as the RMB in stablecoin usage.

Currently, RMB stablecoins have a supply of just $2.9 million, indicative of limited issuance compared to the prevalence of USD-based tokens, such as TRON-based USDT, which remains popular in the Asian market.