For the past decade, fiat-backed stablecoins have driven the growth of the crypto sector. They offer stability, liquidity, and access to financial services for those without traditional banking. These stablecoins have become a popular use case in crypto finance, supporting on-chain activities, facilitating payments, and providing protection against local currency inflation.
After 10 years, fiat-backed stablecoins have established themselves as the leading form of crypto dollars. They dominate the market due to their connection with exchange platforms. Both institutional and retail users prefer the reliability of these stablecoins. Despite the advancements of decentralized stablecoins, the market favors fiat-backed options, especially with the influx of liquidity from traditional finance expected in the coming years.
Centralized Stablecoin Issuers: Cash Machines
Centralized issuers like Tether and Circle control about 90% of the stablecoin market, achieving valuations and profits rivaling major financial firms like JP Morgan and BlackRock. Their business model involves using stablecoin liquidity to back various risky products. With rising interest rates, these issuers have become highly profitable, with Tether generating over $4 billion in revenue in 2023 and nearing a $100 billion valuation.
Every day, funds move from cryptocurrency holders to traditional finance or private individuals. Circle’s planned IPO in 2024 highlights this, offering traditional investors a chance to profit from USDC without directly holding the stablecoin. This dynamic raises concerns about transparency, ethics, and the fair distribution of financial outcomes in the merging landscape of traditional finance and crypto.
Centralized Stablecoins Mimic Banks
The promise of cryptocurrency was a decentralized financial system, giving power back to individuals. However, fiat-backed stablecoins resemble traditional banking, privatizing profits and socializing losses. They can’t yet use fractional reserve banking but still tie their liquidity to commercial banks, introducing systemic risks to the crypto ecosystem.
Regulators often warn about stablecoins' potential threats to global financial stability. However, the real risk is their exposure to traditional banking, posing a threat to the crypto ecosystem. The core value of cryptocurrency—to shift value back to its contributors—remains unfulfilled. The ideal of currency as a public entity is still a dream. Current models operate within traditional financial systems, highlighting the need for a true reformation that aligns with the principles of common good over profit, ensuring the fundamental values of cryptocurrency are preserved and prioritized.
A Call for Change
The ideal of decentralization has been compromised by traditional banking practices. The narrative of cryptocurrency as a liberating force for financial sovereignty is at a crossroads, needing a concerted effort to reclaim its visionary principles. It’s time for a paradigm shift—to untether from the old world and advocate for public infrastructure, transparency, neutrality, and fair value distribution.
Enter Usual: a universal entry gate into a new stablecoin and value-sharing paradigm, offering an alternative to traditional finance. Usual aims to uphold fairness, autonomy, and transparency in the crypto world while remaining profitable. It is part of a comprehensive reform, reviving the initial ethos of cryptocurrency and ensuring everyone has the right to financial sovereignty and a fair share of the value they contribute.
Join Usual in this transformative journey. Embrace change and step into a future where finance is accessible, transparent, and equitable for all. Discover what Usual truly is and join the alternative. 🔮
