Context

The stablecoin market has rapidly grown, positioning itself as a major force within the digital economy, rivaling traditional financial networks. According to Coinbase research, stablecoins processed over $10.8 trillion in transactions in 2023. When adjusted for "inorganic" activity, such as bot-driven or automated transactions, the volume stands at approximately $2.3 trillion. This adjusted figure reflects an organic year-over-year growth rate of 17%, underscoring stablecoins' increasing role in both retail and institutional finance. The following graphs provide visual insights into the current landscape and growth trajectory of stablecoins across major blockchain ecosystems.

This graph illustrates the overall market capitalization trends for the top 20 blockchains from 2020 to 2025. Ethereum stands out significantly, with its market cap reaching over $100 billion at peak periods, dominating the blockchain ecosystem. This large market cap aligns with Ethereum’s established role as a primary platform for DeFi and stablecoin issuance, which has enabled it to maintain a strong position despite market volatility. Other blockchains, such as BSC, Tron, and Solana, maintain comparatively lower but consistent market caps. Tron and BSC, in particular, exhibit stability and steady growth, underlining their use as alternative platforms for stablecoins and DeFi, especially in regions and applications where transaction costs and speed are critical.

Notably, the market caps of newer platforms like Arbitrum, Sui, and Optimism show gradual yet steady growth, hinting at increasing adoption. This growth trajectory suggests that emerging ecosystems may eventually challenge established incumbents by addressing niche demands or offering competitive transaction efficiencies. The graph’s data supports the notion that while Ethereum dominates in overall market cap, alternative blockchains continue to attract users and developers, signaling potential shifts in stablecoin activity as these ecosystems mature.

This graph provides a closer look at the stablecoin-specific market cap trends across the top 20 chains. Ethereum leads with a stablecoin market cap consistently above $8 billion, reflecting its critical role in hosting major stablecoins like USDT, USDC, and DAI. Ethereum’s large market cap supports its position as a stablecoin hub, with demand largely driven by DeFi applications and institutional users seeking regulatory-compliant stablecoins. However, Tron stands out as a significant competitor, with a stablecoin market cap around $4 billion. Tron’s appeal lies in its low transaction fees and fast processing speeds, which make it especially popular in high-frequency transaction environments, such as remittances and cross-border payments.

Other chains, including BSC, Terra Classic, and Solana, exhibit smaller stablecoin market caps but play essential roles in diversifying the stablecoin ecosystem. For example, BSC, with its stablecoin market cap around $2 billion, attracts DeFi projects and retail users who seek lower fees than those on Ethereum. The smaller chains, like Algorand and Stellar, are positioned as niche platforms for stablecoins, often targeting specific use cases, such as cross-border payments and microtransactions.

Existing Incumbents

Ethereum: The Established Leader

Ethereum is often considered the backbone of decentralized finance (DeFi) and remains the dominant chain for stablecoin activity, with over $8 billion in stablecoin market cap. Several factors contribute to Ethereum's leadership position in the stablecoin ecosystem:

• Interconnected and Mature DeFi Ecosystem: Ethereum’s large and mature DeFi ecosystem includes established protocols such as Uniswap, Compound, and Aave, which rely heavily on stablecoin liquidity for operations. Stablecoins are essential for liquidity pools, lending, borrowing, and yield farming, making Ethereum indispensable for users seeking comprehensive DeFi services.

• Institutional and Regulatory Trust: Ethereum-based stablecoins, particularly USDC and DAI, have gained regulatory acceptance and institutional trust. As more institutions enter the crypto space, Ethereum’s reputation as a secure and decentralized network makes it an appealing choice for regulated and institutional-grade stablecoins. Circle’s USDC and MakerDAO’s DAI are major Ethereum-native stablecoins that serve as pillars of trust in the ecosystem.

• Wide Range of Stablecoins and Use Cases: Ethereum hosts a broad array of stablecoins, from fiat-backed options like USDT and USDC to algorithmic and decentralized ones like DAI. This variety allows Ethereum users to choose stablecoins that best suit their risk tolerance, regulatory needs, and preferences. DAI, for example, has a unique appeal as it is not directly tied to a fiat reserve, which aligns with the values of decentralization in the Ethereum community.

• Layer 2 Solutions to Address Scaling Issues: Ethereum has faced scalability challenges, with high gas fees limiting smaller users from participating in DeFi. However, layer 2 solutions like Arbitrum, Optimism, and zk-Rollups are addressing these issues by significantly lowering transaction costs and increasing throughput. This allows Ethereum to maintain its leadership in stablecoin use cases by making DeFi more accessible without compromising on decentralization.

As Ethereum continues to develop its layer 2 ecosystem and transition fully to Ethereum 2.0, it is likely to retain its dominance in the stablecoin market. Institutional adoption is expected to grow as regulatory clarity around stablecoins improves, potentially leading to more fiat-backed and compliant stablecoin offerings on Ethereum. Additionally, Ethereum’s DeFi ecosystem is likely to continue innovating with new stablecoin use cases, including synthetic assets, cross-chain stablecoins, and more sophisticated yield generation products.

Solana: A High-Performance Alternative

Solana is often seen as a high-performance alternative to Ethereum, known for its fast transaction speeds and low fees. While Solana’s stablecoin market cap is significantly smaller than Ethereum’s, it has managed to attract a loyal user base and continues to grow in popularity, especially among retail users and developers looking for cost-effective solutions.

• High-Speed, Low-Cost Transactions: Solana’s unique Proof of History (PoH) consensus mechanism enables high throughput and low latency, allowing the network to process thousands of transactions per second with minimal fees. This makes Solana ideal for applications that require frequent transactions, such as micro-payments and retail stablecoin transfers. As a result, stablecoins on Solana, like USDC and USDT, are often used for day-to-day payments and quick transfers within the ecosystem.

• Integration with Payment and Gaming Applications: Solana has positioned itself as a favorable platform for industries like gaming and payments, where fast, inexpensive transactions are crucial. The platform's user-friendly developer tools and support for high-performance applications have made it a go-to for developers creating decentralized apps (dApps) that integrate stablecoins. Projects like Star Atlas (a blockchain game) and Audius (a music streaming service) are leveraging Solana’s speed and stability, using stablecoins as in-game currency and for tipping, respectively.

• Challenges with Network Stability: While Solana’s high performance is a significant advantage, it has also faced network outages and stability issues. These downtimes have led some users to question its reliability, particularly for high-value transactions or institutional use. Solana’s network resilience is still evolving, and it must address these technical challenges to gain the full trust of the stablecoin and DeFi markets.

• Partnerships with USDC and Cross-Chain Solutions: Solana’s collaboration with Circle, the issuer of USDC, has been a key factor in stablecoin adoption on the platform. The availability of USDC on Solana provides users with a reputable, dollar-backed stablecoin, enhancing Solana’s appeal. Furthermore, Solana is exploring cross-chain solutions that could allow assets to move seamlessly between Solana and Ethereum, offering users more flexibility and expanding Solana’s reach in the stablecoin market.

Solana has significant growth potential in the stablecoin space, especially if it can maintain network stability and further establish itself in gaming and retail payments. By continuing to collaborate with USDC and exploring cross-chain capabilities, Solana could attract more stablecoin transactions and DeFi applications. However, its centralized validator structure and network outages may limit its appeal among institutions unless it can resolve these issues

Key Conditions for Stablecoin Surge

As stablecoins continue to gain traction in the crypto and financial markets, certain ecosystem characteristics and environments stand out as more conducive to stablecoin adoption and growth. These environments are not only technologically equipped but also strategically positioned to meet the demands of both retail users and institutional investors. Below are the specific characteristics of blockchain ecosystems that are most likely to experience a stablecoin surge, backed by recent data and trends observed in the market.

1. Low Transaction Fees

Stablecoin transactions are often frequent and require minimal latency, especially in environments where users rely on stablecoins for everyday transactions, cross-border payments, and remittances. Ecosystems with low transaction fees and high scalability are more attractive for stablecoin adoption as they enable cost-effective transactions without network congestion.

In a survey of stablecoin users in 2023, over 60% indicated that transaction costs are a major factor in their choice of blockchain platform. Ethereum’s average transaction fee remains high, especially during periods of network congestion, often exceeding $10 per transaction. In contrast, networks like **Tron and BSC** have average transaction fees under $0.10, which has driven significant migration of USDT from Ethereum to Tron: Tron has captured a considerable portion of the USDT supply—around 30%—mainly due to its low fees, which appeal to users in regions with high remittance needs. In addition, Binance Smart Chain (BSC) has consistently attracted smaller retail users to its DeFi ecosystem, as its average transaction costs are only a fraction of those on Ethereum.

Blockchain environments that offer low fees and scalability, such as Polygon (layer 2 on Ethereum) and Solana, are also well-positioned for stablecoin growth. With transaction speeds of up to 65,000 transactions per second and low average fees, Solana has seen stablecoin adoption grow, particularly among retail users in payment and gaming applications.

2. Robust DeFi Ecosystems with Diverse Use Cases

A strong DeFi ecosystem not only attracts stablecoin liquidity but also provides utility beyond simple transactions. In environments with lending, borrowing, and yield-generating applications, stablecoins become essential as they offer a stable medium of exchange and collateral, enabling a variety of DeFi products.

Ethereum hosts over 70% of all DeFi applications globally, with stablecoins accounting for nearly 50% of total value locked (TVL) in DeFi protocols on Ethereum. This extensive use of stablecoins is a core reason Ethereum remains the leading platform for stablecoin adoption, despite its higher fees. By Q2 2024, Ethereum’s DeFi TVL was approximately $40 billion, with stablecoins like USDC, USDT, and DAI occupying significant portions.

Binance Smart Chain (BSC) also hosts a vibrant DeFi ecosystem, with platforms like PancakeSwap and Venus utilizing stablecoins in liquidity pools and lending markets. In 2023, BSC’s DeFi TVL reached over $5 billion, with stablecoins making up around 40% of liquidity pools. This utility and accessibility within BSC's ecosystem encourage further stablecoin adoption.

3. Interoperability

As the crypto space becomes more multichain, interoperability is increasingly essential for stablecoin adoption. Stablecoins need to move seamlessly across different blockchains to meet the needs of users who transact or hold assets on multiple chains. Ecosystems that enable easy cross-chain transfers of stablecoins stand to benefit from increased adoption. According to a report by Chainalysis in 2023, cross-chain stablecoin transfers account for roughly 25% of all stablecoin transactions. Solutions like the Cosmos Inter-Blockchain Communication (IBC) protocol allow stablecoins to move across different chains in the Cosmos ecosystem, facilitating liquidity and use cases on a wider scale.

Cosmos and Polkadot are two ecosystems focused on interoperability. Cosmos’ IBC enables chains within its network to interact seamlessly, and stablecoins can be easily transferred across chains, encouraging adoption in specialized ecosystems, such as Terra’s UST (prior to its collapse) and other stable assets issued on Cosmos chains. Polkadot’s parachain structure allows similar interoperability, potentially driving stablecoin adoption across various DeFi and specialized applications on connected chains.

Projects like USDC are also prioritizing multichain issuance, making it available on Ethereum, Solana, BSC, and Avalanche. By enabling cross-chain compatibility, ecosystems can enhance stablecoin utility and encourage broader adoption.

4. Support for Regulatory Compliance and Institutional Demand

Regulatory compliance is becoming a critical factor for stablecoin adoption, particularly as governments around the world are increasingly scrutinizing stablecoins. Blockchain ecosystems that can support compliance requirements, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, will likely see stronger adoption among institutional users and compliant stablecoin issuers.

In 2023, around 30% of stablecoin inflows on Ethereum were linked to institutional transactions, largely due to the regulatory compliance capabilities of Ethereum-based stablecoins like USDC. In contrast, chains with looser regulatory structures, such as Tron, primarily cater to retail and remittance-based use cases.

Algorand and Ethereum have positioned themselves as regulatory-friendly ecosystems. Algorand supports compliant stablecoins, including USDC, and has established partnerships with regulated financial institutions to ensure compliance. Ethereum, through Circle’s USDC and MakerDAO’s DAI, provides options that align with regulatory requirements, making it the top choice for stablecoin issuance with significant institutional interest.

As regulatory clarity around stablecoins improves, chains that prioritize compliance are likely to see more institutional participation. For example, Avalanche’s ability to create customizable subnets allows institutions to build regulated environments, potentially attracting more stablecoin issuers who must adhere to specific compliance standards.

5. Geographic and Regional Demand for Low-Cost Remittances

In regions where financial inclusion is limited or banking fees are high, stablecoins offer a viable alternative for everyday transactions and cross-border remittances. Ecosystems that cater to these markets by offering low fees, high accessibility, and integration with payment providers are well-positioned for a stablecoin surge.

According to a World Bank report in 2023, global remittances exceeded $700 billion, with stablecoins making up a growing share of cross-border transactions in countries with limited financial infrastructure. Blockchain environments that offer low transaction fees and rapid processing have the potential to capture a significant portion of this remittance market.

Tron has gained popularity in Asia, Africa, and Latin America, where it is widely used for cross-border remittances due to its minimal fees. Tron's network processes high volumes of stablecoin transactions daily, especially in USDT, which has been largely adopted in these regions as a means of sending money abroad without the need for traditional banking services. This trend is reflected in Tron's average transaction fees, which remain below $0.10, making it an ideal platform for remittance-based stablecoin use.

BSC also serves the remittance market well due to its low fees and strong presence in Asia, where Binance’s exchange ecosystem has built trust. Additionally, chains like Celo are targeting emerging markets by focusing on mobile-based financial services, facilitating stablecoin usage for unbanked and underbanked populations.

6. High Scalability

Layer 2 solutions offer a promising way for chains to address high transaction fees while maintaining security and decentralization. Blockchains that integrate layer 2 scaling solutions can support larger volumes of stablecoin transactions at lower costs, attracting users who are priced out of layer 1 networks.

Layer 2 protocols on Ethereum, such as Arbitrum and Optimism, have seen rapid adoption, with a combined TVL of over $5 billion by mid-2024. A significant portion of this value is in stablecoins, used in various DeFi applications and payments. Layer 2 solutions have reduced transaction costs by over 90% compared to layer 1, making them highly attractive for stablecoin users.

Polygon, a leading layer 2 scaling solution, has seen considerable stablecoin growth due to its ability to offer Ethereum’s security with reduced fees. Platforms like Aave and Uniswap have deployed on Polygon to take advantage of the lower costs, and USDC and DAI have seen increased use on Polygon as a result. Similarly, Arbitrum and Optimism on Ethereum are enabling more cost-effective stablecoin transactions and are attracting DeFi protocols that rely heavily on stablecoins.

As more chains adopt layer 2 scaling solutions, stablecoin adoption is likely to increase across these environments, as users are able to access stablecoin functionalities at a fraction of the cost of layer 1 networks.

Potential Challengers

As the global demand for stablecoins grows, emerging blockchain ecosystems like TON (The Open Network) and Sui show distinct promise for stablecoin adoption due to their unique infrastructure, target user bases, and growth strategies. While established chains like Ethereum, Tron, and BSC currently dominate stablecoin activity, TON and Sui bring innovative approaches that could differentiate them in the stablecoin market. Below, we provide a detailed analysis of TON and Sui's potential to drive a stablecoin surge, comparing them to current leaders, and exploring the financial implications of increased stablecoin activity in these ecosystems.

TON: Leveraging Telegram's Network for Retail-Driven Stablecoin Adoption

TON was originally developed by Telegram before being handed over to the open-source community, and it has since evolved into a high-performance blockchain. TON’s market cap currently sits around $5 billion, which is relatively small compared to Ethereum’s $200 billion and BSC’s $35 billion. Despite this, TON’s potential lies in its unique integration with Telegram, which boasts over 700 million monthly active users globally. This built-in user base positions TON as a strong contender for stablecoin adoption, especially in markets where Telegram is popular for communication and peer-to-peer transactions.

Key Characteristics Favoring Stablecoin Adoption:

1. Seamless Integration with Telegram:

   • TON’s direct integration with Telegram could make stablecoins on its network highly accessible for Telegram users, enabling seamless peer-to-peer transfers and payments. This setup is particularly advantageous in countries where banking infrastructure is limited but Telegram is widely used, such as Russia, Ukraine, Turkey, and various regions in the Middle East and Southeast Asia.

   • Example Use Case: If a stablecoin like USDT or USDC is widely adopted on TON, users could send stablecoins within the Telegram app with a single tap. This integration could make TON-based stablecoins as easy to use as popular digital payment solutions like Venmo or WeChat Pay, creating a low-barrier entry point for users who are new to blockchain.

2. Low Fees and High Scalability:

   • TON’s sharding-based architecture allows it to handle high transaction volumes at low costs, making it attractive for stablecoin transactions. With average transaction fees estimated to be below $0.01, TON is competitive with both Tron and BSC in terms of cost efficiency. This affordability could drive adoption for daily transactions and micro-payments, where users are fee-sensitive.

   • TON’s scalability ensures it can handle increased traffic without significant slowdowns or fee increases, which is crucial for stablecoin use in high-frequency transaction settings, like remittances and retail purchases.

3. Built-In Custodial Options and User-Friendly Interface:

   • TON’s custodial and non-custodial wallet options cater to different user types. The custodial wallet embedded within Telegram simplifies the experience for casual users, while the non-custodial wallet serves crypto-savvy users who prioritize security and ownership. This dual approach could increase adoption across a wider demographic, including both retail users and more experienced crypto holders.

If TON successfully attracts stablecoins or launches its own ecosystem-specific stablecoin, it could capture a significant share of the retail and remittance stablecoin market. Given Telegram’s extensive reach, TON has the potential to onboard millions of new stablecoin users, particularly in emerging markets where Telegram is popular.

If TON captures just 1-2% of the current global stablecoin market (estimated at $120 billion), this would result in a $1.2 to $2.4 billion increase in stablecoin market cap within the TON ecosystem. This additional activity could raise TON’s own market cap from $5 billion to $6-7 billion, positioning it as a top-tier platform for stablecoin transactions.

With a base of 700 million active Telegram users, even a 5% stablecoin adoption rate on TON could bring in 35 million users, a significant boost compared to existing stablecoin adoption rates on other chains. This user base would drive not only stablecoin transactions but also demand for other TON-based services, contributing to ecosystem growth.

TON’s Value Proposition on Use Cases

TON's deep integration with Telegram has led to a substantial increase in stablecoin activity. The vast, ready-made user base provides TON with a built-in audience that no other blockchain ecosystem currently rivals. The supply of Tether (USDT) on the TON blockchain has surged from $100 million to $1.2 billion since May 2024, indicating growing user adoption within the Telegram ecosystem.

Telegram’s popularity in regions like Russia, Southeast Asia, and the Middle East, where traditional banking infrastructure often falls short, creates an opportunity for TON-based stablecoins to serve as a practical alternative for peer-to-peer payments and remittances. If stablecoins are integrated natively within Telegram, users could send funds seamlessly with minimal friction, replicating the ease of services like Venmo or WeChat Pay but on a global scale. This convenience could accelerate mainstream stablecoin adoption in underbanked regions, where access to financial services is limited.

TON’s sharding-based architecture allows it to achieve scalability while maintaining low transaction fees, typically less than $0.01 per transaction. This cost efficiency is crucial for microtransactions and high-frequency retail use cases. For example, stablecoins on TON could be used to facilitate tipping within Telegram communities, paying for digital content, or enabling small business transactions. Additionally, the affordability of TON’s transactions positions it as a serious competitor in the global remittance market, particularly in emerging economies. According to the World Bank, global remittance flows exceeded $700 billion in 2023, with stablecoins playing a growing role in these cross-border payments. TON’s integration with Telegram could simplify the remittance process, reducing fees to a fraction of traditional banking methods and making it a compelling alternative for millions of users worldwide.

Sui: A High-Performance Blockchain Targeting DeFi and Institutional Use Cases

Sui, developed by Mysten Labs, is a relatively new blockchain with a market cap around $800 million. Despite being in its early stages, Sui’s high-performance capabilities and focus on DeFi make it an attractive candidate for stablecoin adoption. Compared to Ethereum and BSC, Sui’s market cap is much smaller, but its specialized technology and institutional appeal position it well for growth in the stablecoin and DeFi spaces.

Key Characteristics Favoring Stablecoin Adoption:

1. Advanced Consensus Protocols for High Throughput and Low Latency:

   • Sui uses the Narwhal and Tusk consensus protocols, which enable high transaction speeds and low latency. This setup supports a high transaction per second (TPS) rate, making Sui ideal for DeFi applications where transaction speed and reliability are critical. Low latency also benefits stablecoin users who require instant finality, such as in lending, borrowing, or complex trading scenarios.

   • Example Use Case: High-frequency trading in DeFi requires stablecoins for rapid collateral swaps and liquidity provision. Sui’s high throughput could attract institutional DeFi protocols that rely on stablecoins, positioning it as a competitor to Ethereum in high-value DeFi transactions.

2. DeFi-Centric Ecosystem with Institutional Appeal:

   • Sui is actively positioning itself as a DeFi-centric blockchain, with early applications focused on lending, borrowing, DEXs, and asset management. As stablecoins are essential to DeFi applications, Sui’s focus on building a strong DeFi foundation could drive demand for stablecoins used as collateral, in liquidity pools, or as a medium of exchange.

   • Institutional Interest: Sui’s programmable infrastructure allows for customizable compliance solutions, which may attract institutions looking for secure and regulatory-friendly environments for stablecoin transactions. This capability could lead to collaborations with regulated stablecoin issuers, adding credibility and attracting institutional interest.

3. Move Programming Language for Security and Flexibility:

   • Sui uses the Move programming language, designed with a focus on security and asset protection. Move’s resource-oriented programming model minimizes the risk of bugs and ensures a secure transaction environment, which is appealing to both retail and institutional users. Enhanced security could position Sui as a safe environment for high-value stablecoin transactions and complex DeFi protocols.

If Sui captures 0.5-1% of Ethereum’s stablecoin-driven DeFi market (estimated at $40 billion in stablecoin activity), this would bring an additional $200-400 million in stablecoin market cap to the Sui ecosystem. Given Sui’s current market cap of $800 million, this surge in activity could push its valuation over $1 billion, doubling its existing market value.

Meanwhile, Sui’s architecture and regulatory compliance potential could attract institutions that prioritize stable, secure environments for digital assets. If Sui becomes a preferred chain for institutional DeFi, it could see significant capital inflows, establishing it as a core player in the DeFi space alongside Ethereum and BSC.

Sui’s Value Proposition on Use Cases

The Move programming language enhances Sui's ecosystem by providing a secure environment for developers to build robust financial applications. This resource-oriented programming model minimizes bugs and ensures that digital assets are handled securely within smart contracts. This makes Sui particularly attractive for institutional-grade stablecoin use cases, where security and compliance are paramount. For instance, programmable stablecoins deployed on Sui could enable highly secure lending and borrowing protocols, where algorithmic rules enforce collateralization and repayments. In the long run, this could attract large-scale financial institutions seeking to integrate stablecoins into their operations. For example, in November 2024, Sui entered into a strategic partnership with Franklin Templeton Digital Assets, a division of the global investment firm Franklin Templeton. This collaboration aims to support developers within the Sui ecosystem and deploy innovative technologies leveraging the Sui blockchain protocol. Franklin Templeton's involvement underscores Sui's potential to drive institutional growth in the broader blockchain space.

Sui’s compliance-focused infrastructure makes it a viable platform for cross-border trade, where stablecoins could be used to settle international transactions in real-time, with smart contracts enforcing terms of trade. This institutional appeal and flexibility position Sui as a blockchain capable of competing with Ethereum for high-value stablecoin use cases.

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