Stablecoins set to succeed where BTC, ETH failed: Pantera

Stablecoin space is set to transform as providers will need to offer money market yields to stay competitive, Pantera executive says


dRender/Shutterstock modified by Blockworks


Bitcoin and Ethereum — though “wildly successful” — have not fulfilled the original expectations many had for crypto, according to an executive at Pantera Capital.

But stablecoins are poised to, Jeff Lewis, a product manager at the crypto-focused hedge, wrote in a Tuesday letter.

Fifteen years after the Bitcoin whitepaper, BTC’s lack of speed and scalability hurts its case for being a good replacement for money, he notes. Ethereum “has become the programmable decentralized system that Bitcoin alone could not be,” paving the way for an ecosystem of NFTs, Web3 applications and DeFi powered by ether [ETH].  

“Unfortunately, Ethereum is almost as volatile as bitcoin, making it unsuitable as a stable currency,” Lewis adds. 

Stablecoins, on the other hand, are set to enable peer-to-peer transfers of value. They will also help people to protect against unstable currencies and avoid trusting service providers, the Pantera executive said.

Lewis compares payments giant PayPal to a stablecoin, noting it allows users to cheaply transfer digital ledger entries worth one dollar to merchants and peers worldwide. The company even launched its own stablecoin, PYUSD, in August

The largest stablecoins — tether (USDT) and USDC — are not natively interest bearing. But a trustless, transparent and yield-bearing “PayPal 2.0” could be on the way, Lewis argues. 

This vision appears hypothetical, as PayPal has not announced any such plans. A PayPal spokesperson did not immediately return a request for comment on the matter. 

“That stablecoin is coming because as soon as regulations are clear, market conditions will force providers to offer money market yields to be competitive,” Lewis wrote in the letter. “We are already witnessing an explosion in the stablecoin market of coins with yields generated by underlying money-market investments as well as the tokenization of the money-market itself.”

Read more: Powell: Stablecoins are a ‘form of money’ the Fed needs to regulate

Franklin Templeton, a fund group with about $1.5 trillion in assets under management, in 2021 launched a money market fund that uses a public blockchain to record transactions. One share of the fund is represented by one BENJI token — allowing it to act like a stablecoin with yield.

JPMorgan has built blockchain-based applications, while Citi’s new Citi Token Services intends to let clients access tokenized deposits, cross-border payments and automated trade finance solutions 24 hours a day.

Ondo Finance launched tokenized US Treasury and bond offerings earlier this year before Adapt3r Digital later in August unveiled a tokenized fund on decentralized marketplace Archblock.

Read more: TradFi, DeFi convergence continues through tokenizing real-world assets

Stablecoins “present one of the clearest prospective templates for tokenization today,” Coinbase institutional research head David Duong and analyst David Han wrote in a Monday report.  

“We think stablecoin liquidity could be one of the clearest ways that tokenization intersects with the broader crypto economy as part of the next market cycle,” Duong and Han added. 
PayPal’s platform is more attractive than banks because of its ease of use and its quickness, Pantera’s Lewis noted. 

“Well, what if PayPal 2.0 has a market yield and is verifiably, visibly safe?” he added. “We get the first true mass-adoption of a token and we unleash the next great wave of growth in the entire crypto ecosystem, as consumers can focus on the value of the products and services within the crypto ecosystem instead of the tokens issued by those projects.”

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg


Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.


MicroStrategy discloses the purchase of 16,000 bitcoin throughout November


Digital asset firms face potential new regulatory landscape under Treasury’s proposed authority expansion


Uniswap Labs will be providing trading APIs to Talos investors through Fireblocks


DYDX supply will climb by up to 80% after the Friday unlock, but a couple factors make a massive sell-off appear unlikely


Switzerland-based Pando Asset, which has crypto products trading on the SIX Swiss Exchange, now looks to the US


Binance does not hold the required licenses to advertise and serve customers in the Philippines, the country’s securities regulator said