Unchained - The Chopping Block: Stablecoin-as-a-Service: The Next Big Crypto Gold Rush? - Ep. 906

Episode Date: September 18, 2025

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. This week, we’re joined by Gordon Liao, Chief Economist at Circle, to dissect the Stablecoin Wars. From Circle’s Arc and Stripe + Paradigm’s Tempo, to Solana’s native stablecoin push and Hyperliquid’s deal, we unpack why everyone suddenly wants their own chain or branded stablecoin. Is this the future of crypto’s monetary layer — or just a fragmentation nightmare? We dig into FX use cases, PMF for stablecoins, collective bargaining power of ecosystems, and whether “stablecoin-as-a-service” is the next killer primitive or a liquidity trap. Show highlights 🔹 Arc vs. Tempo — Circle’s Arc and Stripe + Paradigm’s Tempo: stablecoin-native L1s with permissioned validator sets, stablecoin gas, privacy, and FX engines. 🔹 Will FX Ever Matter? — Gordon: $9T/day FX market is broken; onchain FX could slash costs. Tarun + Haseeb question whether non-USD stables will ever get real traction. 🔹 Solana’s Stablecoin Gambit — Mert & Solana cabal eyeing a native stable to “stop giving Circle all the yield” — can a chain coordinate its way to PMF? 🔹 Collective Bargaining Meta — Hyperliquid deal proves apps/chains can extract economics from issuers; could ecosystems unionize to demand rev share? 🔹 Money Velocity Problem — BUSD worked (until it was banned); Huobi’s KUSD died for lack of velocity; most native stables never circulate beyond mints/redemptions. 🔹 Stablecoin-as-a-Service Gold Rush — Everyone launching a wrapped stable: M^0, Paxos, Agora. Does this dilute liquidity and trust — or unlock new UX? 🔹 Trust & Brand Moat — Users can’t be forced to convert; Circle’s scale, bank rails, and liquidity network remain hard to replicate. 🔹 Network Effects ≠ Monopoly — Stablecoin market evolved into USDC/Tether duopoly with niche players (Athena); future may see more vertical-specific winners. 🔹 Reg + Yield Outlook — GENIUS Act may ban interest payments; as rates fall, mint/redeem fees may replace reserve yield as the main revenue source. 🔹 Stablecoin Future — Will Solana, Tempo, Arc, and others fragment liquidity — or finally bring the next billion users on-chain? Hosts⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️Gordon Liao, Chief Economist & Head of Research at Circle Disclosures Timestamps 00:00 Intro 00:52 Gordon Liao from Circle 01:48 Stablecoin Chains: Arc vs. Tempo 04:40 Memory Lane with Libra  06:33 Will FX Ever Matter for Stablecoins? 12:06 Challenges with Stablecoin Adoption 23:12 Circle’s Strategy & Competitors 26:13 Stablecoin Negotiations & Ecosystem Dynamics 31:39 Launching a Global Scale Stablecoin 37:25 Role of Trust & Branding 41:25 Stablecoin as a Service 57:53 The Future of Stablecoins Learn more about your ad choices. Visit megaphone.fm/adchoices

Finance was able to do BUSD, but notice no other exchange has this. Right, no other exchange has this. Cracken doesn't have K-U-SD, Bibet doesn't have buy-USD. I mean, I remember Hoeywobie had one back in the day. Hobie used to have one, and it didn't, like, they were never able to get money velocity. It just died on the vine and they went back to USDT, that's right. Not a dividend. It's a tale of two fond.

Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm named trading firms who are very, very, involved. I like that ETH is the ultimate month. DFI protocols are the antidote to

this problem. Hello, everyone. Welcome to Chobbing Block. Every couple weeks, the four of us get together and give the industry

insider's perspective on the crypto topics of the day. So quick intro that's first you got Tom, the DFI Maven and Master of Memes.

Hello, everyone. Next, we've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo. Joining us today,

we've got special guest Gordon, Chief Number Cruncher at Circle. Thank you so much. Good to be here. And I have a C, the head hype man, a dragonfly. We are early-stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice.

Please see chopping blocks and XYZ for more disclosures. So last week, we had a bit of a noisy episode where we talked a lot about Circle, and it turned out that sent the bat signal out into the ether. And here we are. We have the chief economist and head of research at Circle, Gordon Lau. And Gordon, you have very generously promised to tell us what the stock price of Circle is going to do, as well as unannounced product launches. So Gordon, the floor is yours. Please tell us what's going to happen to Circle Stock. That's hilarious to see.

Any forward-looking statements you'd like to make? That's exactly why people are tuning in for this particular podcast. That's right. That's right. Okay. Well, all right, fine. I guess you can't, maybe that's not, maybe you're not allowed to do that. But there is a lot of talk going on right now about stable coin chains. So stable coin chains, of course, are these new generation of chains that are these verticalized chains that are specifically focused on some kind of stable coin use case. So whether it's payments, whether it's issuance or whatever, or all of the above. And the idea is that when you have a chain where, I believe, as Turun put it, the central object

is a stable coin instead of, you know, a gas token like Ethereum or whatever, that that potentially creates new use cases, new demand, or is going to be more for what the broad masses of people coming on chain are going to be using these things for. So the first stablecoin chain of Real Note was ARC. So ARC is the one that's launched by Circle. And it's a layer one blockchain. And we covered it a little bit in a previous show. But I want to compare ARC to Tempo.

So Tempo was the one that just announced a little bit over a week ago, although it'd been teased for a while, that paradigm and stripe were partnering up together to build a layer one blockchain. Now, Tempo is being led right now by Matt Huang. Matt Huang is the CEO of Tempo, which a little bit surprising because he's also the CEO of Paradigm. And it's a payments first layer one for stablecoins, which means, again, you know, things like payroll, remittances, tokenized deposits, agentic payment, whatever, everything that people

say stable coins are used for, they want to be used for that. Some of the details that we have so far about Tempo, it starts off with a permissioned validator set. So they had a bunch of people around the table, Anthropic, coupon, Deutsche Bank, DoorDash, Mercury, New Bank, OpenAI, Revolut, Shopify, Standard Charter, and Visa were all announced as design partners. Now, design partners, I don't know what that means. It's not clear exactly what that means, but many of these people were tweeting alongside the initial announcement saying like, yes, tempo's great, blah, blah, blah. So we don't have a lot of details about what their involvement

is specifically, but presumably they're going to be part of the validator set. And the claim is that it's going to decentralize over time. Now, there was a lot of, there's a lot of anger at tempo, seemingly because it was a layer one and not a layer two. So a lot of the Ethereum people got really upset and we're just like, why are you doing this? This is an assault on Ethereum, and you guys are Ethereum turncoats, specifically pointed at Paradigm, not Stripe, because I don't think anyone's mad at Stripe. And it's like, hey, why do we need more layer ones? And then the paradigm came out and said, hey, just so you know, we intend this to be a neutral base layer. We're not going to be controlling these pipes, sanctions and all this kind of stuff is going to happen at the edges,

not on the blockchain itself. But similarly, I didn't see any of this response to ARC. It seems like I got some too. You got some two. Okay, well, good to know. We got some too. But, you know, I think we were not as targeted. Yeah, yeah, clearly, clearly. So there's a, there was a lot of comparisons with Tempo and Libra.

For those of you who don't recall, Libra was also a consortium back in 2019 when Facebook announced that they were going to build their own stable coin back blockchain. I know Tarun was actually very involved in the White Paper, I think you were a co-author on the white paper way back in the year. I was a reviewer, but yeah. I loved when you just said to those of you who don't remember, it's like more to those of you who lack brain. Those of you who are not here. Who lack brain damage from that era. Yeah, yeah, yeah.

Well, the brain damage seems to be accelerating with every subsequent vintage. You know, Libra was actually how I first got started being interested in Stable Court. because at a time I was at a Federal Reserve board in D.C. And the broader team I was part of was actually looking at, I was in the international financial finance team and looking at global sovereign markets, global currency, all of a sudden you have a Libra news pop-up. The Fed just went into super drive of what is this, is this going to threaten monetary sovereignty? How is this going to work with different central banks?

You remember. You were part of the team that called the Congress people to shut down Libra. Well, let's just say that at one of the Christmas parties, there were definitely people who were celebrating the downfall of Libra at the Fed. Yeah, because if you remember how that construct was, initially it was a basket of currencies, and that fundamentally just threatened the monetary policy sovereignty of every single central bank out there. So I saw it from the other side. And I wish they had some more foresight into what the response will be.

Circle has employed lots of people who worked on Libra. So I feel like they have institutional knowledge of the mistakes. Well, thankfully, crypto is now America first. So no more baskets of currencies. That's a very globalist perspective on how to build a blockchain. Now every blockchain is figuring out how do we become America first and launch our own USD-denated blockchain. But so, okay, I want to get your reflections on tempo.

Gordon, I know that you guys are building ARC and there's some similarities with ARC, some differences. Some of the similarities that I noted, ARC is also going to have stablecoin native fees so you can pay fee, you know, the sort of the gas token, the fee token. is going to be in USTC on ARC, whereas I believe on Tempo, the idea is that you can use any stable coin. The validators presumably will whitelist some of it. Arc is going to have the full circle stack, USC, the euro,

it's kind of CPN, Mint, wallet, paymasters, all of that stuff is going to be there. And you've also got USYC, which is basically a sort of on-chain money market fund that, you know, I guess non-US users can directly access on-chain. But it's largely very similar, right? the whole idea of, okay, you got built-in FX, you've got confidential transactions, where you shield the amount that you're transferring. That stuff looks like similar between Arc and tempo. And I have to imagine they looked at what you guys are doing and probably took some, let's call it, inspiration from what they saw at Arc. But obviously, also competitors, right?

I mean, the Stripe has bridge, which is their stable coin issuers. They have USDB. And they're directly coming for the crown that right now Circle is wearing. So curious to get, what is your response seeing what Tempo has pre-announced compared to what you guys are trying to do with Arc? Well, obviously, you know, Stripe and Periden are respected institutions in their respective space, right, in both payments and also in the VC space in the crypto space. Now, what they announced is I think they center their message around a stable coin payment type of use case and payment is, you know, what Stripe is known for. But I would say that if you think about what Arc is trying to do, it's really trying to do. is really trying to bring Stablecoin finance, where we call StableFi, to the masses, for adoption.

And what do you need for that broader adoption? You know, we've seen blockchain has been around for, you know, over a decade, and Ethereum has been around for a long time now. But still, I would say that the everyday users are not necessarily adopting or it's very hard for people to adopt it. We think that they're core missing features. Now, having StipoCoin as a gas token to pay fees is one of those features, But that's not the only one.

The other aspect, the other two features that we highlighted is subsection deterministic finality. Now, deterministic is actually quite important if you're talking to regulated institutions that require that sort of certainty instead of just economic finality or probability finality. And then the third aspect is we're building opening privacy that would allow institutions, enterprises to selectively hide, for instance, balances and transfers initially and perhaps later not even addresses, but that's compliant with the rules and laws that regulators have. So I would say those three core differential features of stable coin fees, opening privacy, and finality are what's that arc apart from many of the other chains out

there and is meant to, on that, bring new users, new adoptions, Because we believe, you know, Circle being this great connector of the Lexi world, the Fiat world, and the Anchin world, we have this, you know, special trust. And we have also the banking rails built out to bring the masses on chain. And they'll be great for the benefit of many ecosystems. Turin, what's your take? Seeing tempo, arc. What do you think about Stripe getting into the game? So something I have been kind of curious slash confused about is like everyone really emphasizes the effects.

stuff, but like I've never really figured out how much people actually care. Like, like, I, like, I think there's always the story in many things that have happened in crypto in the like last 10 years where people always talk about like FX, local currencies, things like that. And like, none of them have really stuck. Like, everyone just still ends up back in dollars. Just be clear for those who don't know. FX stands for foreign exchange. So like, it's changing one currency into another. Yeah. And like we've, we've just like historically had this like lull where like, time someone tries to do another currency, like do the Euro, do the Rimini, do whatever. It never seems to stick either because liquidity is bad or yield is horrible or like people don't want to take,

except the Euro version. And so I'm kind of curious like why, you know, I think this was true with Libra. This is the true with all the stable coin chains of like the ICO era, like the cellos of the world, or everyone was always talking about this like FX localized currency. thing. And I know there's this like ideological dream that people think that like that is like a really great selling. But I have yet to really see. So I'm curious like why do you, you know, why do you think that's a big focus? Have you observed a lot of demand for that? Because like that's, that's something I've always just been like people love dollar stable coins. It's really hard to pry them out of their hands. They like they do not want to. Well, it's also important to refer to the backdrop

to that question is that 99% of stable coins on chain are US dollar denominated. many, many people have tried. And of course, Circle, I think, has the biggest Euro product. And there's a bunch of people doing other currencies. And we've gotten to cajillion pitches over the years for non-US dollar stable coins. And none of them have worked. So it's important backdrop when you're asking this question for the audience to understand is that the state of play today is that almost everything is U.S. dollars.

Yeah, I think there are two ways to look at it, right? One is, you know, what challenges are you trying to solve with blockchain? One of the core challenges I think blockchings could solve is its global payment conundrum where it is, today you have massive amount of FX volume. I think it's like $9 trillion per day of volume. Yet when I try to pay somebody halfway across the world, oftentimes I take days, oftentimes it's charges. I think the World Bank estimate the cost of remittance is still like 6% on average in some countries, some quarter of its in terms of percentage. That still remain to be very expensive. and so that's a fundamental problem outside of crypto that people should look at

and should try to figure out how to solve it. FX is a core part of that issue because you're actually operating on multiple ledgers in the fiat world, right? It's not just a single settlement at the Federal Reserve for the Fed wire system in dollars, but it's also dealing with a separate ledger at another central bank. You have multiple correspondent banks in between. So at the end of the day, you're suddenly on so many different traditional ledgers. So that's the fundamental, like, more fiat issue that I think why blockchain could solve because it's more interconnected, because it's faster, because you don't have all these broken fragmentation.

But then you rightly pointed out absolutely 99% of today's stable coin are dollar-based. But that doesn't mean that, you know, in the future, there won't be more growth of local stablecoins. In fact, you know, ARC is designed to support many other. other stable coins, and it's actually we wrote it in our life paper as well that will support a paymaster that allow you to pay in different stable coins, in different dollar stable coins and different stable coins denominating other currencies. I think so far, the other currencies hasn't grown yet because simply you don't have local assets or denominated in those currencies on chain.

Imagine someday you have massive amount of on-chain real-world asset, so traditional bonds, and equities that get tokenized. Of course, when you tokenize, I don't know, the Korean one bonds or, you know, some Japanese companies, those companies are not going to trade in a dollar denominated stable coin. They have to have a local stable coin for it to trade. And the local jurisdictions and governments are going to impose somewhat of a control of making sure that they keep their monetary sovereignty. But it comes back to this important aspect of what is a numerary asset?

What is the numerous asset for denominating the risky asset you're trading? So in global oil and gas market and gold market is the dollar, and the crypto market is mostly the dollar. But when it comes down to local tokenization or local securities, it has to be the local currency. So I think it's just the time hasn't come yet. But once you have local tokenized assets, local tokenized credit that's trading on chain in a massive scale, you have to have the growth of corresponding local stable coins. that growth with it. But do you think it's possible it becomes winner take all where like because of liquidity depth is so much higher for dollars that everyone just ends up finding the exit costs for

exiting out of these assets, like entry and exit costs for complex transactions, ends up just being cheaper in dollars and then people don't use the other currencies. Because even when I look at local currency pairs on crypto exchanges, right, where they like allow you to deposit fiat, it. the only two currencies that hold a candle to the USDA are like Turkish lira and Korean lawn. And that's just because of like, that's where there's a lot of speculative activity. But even there in those places, like most of those exchanges still have like USD stable coin dominance in the long run. So I'm just kind of curious like why this is, the reason I was

bringing this up is like, I do think the FX stuff features prominently in both tempo and arc. it's like it seems and like I maybe I'm just like I've just I've just I've been too long and I'm just like it's just like make yeah it's just like one of these things where it's like I've seen so many failures of this is it really gonna work I think it's just a different use case right like if you think about what is PMS for stable coins today it's offering a dollar denomed savings account to consumers all around the world right like actual you know payment volume is not small but it's not gigantic compared to every other sort of payment network out there it's really just like I want to save in dollars and I'm a person who lives in random country. And so this is kind of the thing that I'm going to use. For business, you have a bunch of different concerns, right? Like, if you have liabilities in your local currency, like, you do need to pay those in those local currency. But, like, that's just not where PMF is for stable coins today. And I think my, my question for Arc and for tempo is, like, this is more of a B2B kind of product. And so therefore, yeah, if you're operating in a different country and you do actually care more about FX versus, hey, I'm in Argentina and I want to, like,

have some tether on ton. And like, that totally actually serves my use case. Well, so my would be the following. So I'd say it's obviously true. I mean, look, Gordon, the story that you just told about effects is a story that I've been hearing now for like seven years. And I know that you've been hearing it too. And we're all watching. Yeah, we're watching the fact that like, yeah, this 99% US dollar stable coin thing has been true when I started. It was true five years ago. It's still true today. It just doesn't move. Like USD has been absolutely dominant on chain, despite the fact that it's largely an international story. Most stablecoin, are used outside the U.S. in countries where U.S. dollar is not the numerare of the local currency.

So it tells us something very important about what the first inning or the first act of stable coin adoption is going to be, is that it's going to be international adoption of a way to use U.S. dollars. That may change over time, but right now that is what it is and it'll probably continue to be that for at least another few years. But like for circle and for the issuers, all they really care about is the AUM, right? The AUM is what matters because that's what you make the yield on, right? Most of the business models the yield, although there's a little bit also made and, like, you know, create redeem, but the main moneymaker is the yield. It's pretty plausible to me that if you're a business, and let's say you're Brazilian exporter, and you, you know,

have Rial denominated liabilities, or maybe some of the people you're paying in Rials, some of the people you're paying in dollars, you want to have some ability to take Rials, put them all on chain, and then, like, some of them you send to some people in Rials, some people, some you send to some people in USDA, and it all is just very seamlessly converted, right? That's probably not a huge amount of flow. You probably don't actually need a huge amount of TVL sitting there as resting liquidity to convert all the people who are moving from Rials to dollars. But if you have no liquidity, then that person is like, well, this just doesn't, this just doesn't work for me. I just can't do this unless I am figuring out how to get the Rial U.S. dollar corridor myself. And so on some level,

like for tempo, for ARC, for all these chains, having that, FX engine, a big part of the reason why it's there is just to make it really easy. But it doesn't actually demand that there be a huge amount of liquidity or a huge amount of issuance. It's just that every single corridor, you don't have to think about it. There's a real-all stable coin. You can take your realls, put them into the real-all stable coin with basically no slippage, and then get really tight quotes in real-time to turn realls into dollars.

And if you just do that for enough corridors, then now you've built, I mean, look, it's not as tight as the global FX market, but it's a hell of a lot better than like, you know, paying 5% and waiting two weeks to move money from Rials into dollars. That I think is the pitch, which doesn't actually demand this 99% U.S. dollar dominance thing to change. That might still be true, even if you have very, very liquid ways to turn Rials into dollars. But the vast majority of the demand is like people just want dollars. Yeah, I think that's partly true for payment and Circle Payment Network, which we announced and launched earlier this year.

It's kind of addressed at how do you actually get dollars? into reels in people's hand. But when you also have tokenization of, say, cost P200 index and ETF form that's tokenized, when you have, you know, the Niki tokenized, those assets eventually, I think, will have a local stable coin price. It's just we're not there in terms of overall tokenization.

Right. So, but it's, the lesson I think in crypto is that you cannot, you cannot make moves like three steps ahead on the chessboard. You kind of have to move the pond down the thing, like one step at a time. And right now, we're at the place where like, yeah, there are Brazilian exporters who want to use stable coins. But there is nobody right now who wants to trade the Niki against the yen on chain, right? Like the volumes for the latter are growing exponentially. I'm sorry, the latter for the former is growing exponentially.

The latter, we want it to be true. Everybody's saying it's going to be true, but it's not true right now. And that's not, I think, the primary story about these kind of non-US dollar stable coins. So, actually, can ask for a prediction. Which asset, which currency do you think will be number two? Let's say, let's say like arc and tempo both or whatever, one of them or both of them, at least one of them succeeds, gets a ton of businesses on. Well, obviously, they're here.

Yes. Well, so where do you, I'm just, I'm just trying to, I'm kind of just like keep the light cone, the light cone of the future open, you know, I'm not trying to. trying to restrict, you know, what the outcomes are. Yeah, yeah. So, like, what do you think number two is currency-wise? Because, like, I do feel like everyone has really been pushing this, like, Euro thing. But I, like, I just have this feeling in my head that it will never be the Euro.

Why? Why do you think it'll never be the Euro? I just sort of feel like the European governments want to find every possible way to, like, add an extra tax at every little time you try to tokenize anything in a way that, like, why would you, It's like the most frictionful. Yeah, what was the story that just goes yesterday? It was like the UK said like, oh, you can only have $10,000 of stable coins or something per person. And it's like what? Like, that doesn't make any sense.

Yeah, that was crazy. That was absolutely crazy. Yeah, it just feels like there's so much in like friction taxes that seem to just be added randomly. And like last minute that it's like, how could you ever want to keep like assets that might be like collateral for a long term loan like in your house? But that's just my personal. I'm just curious, Gordon of your. You're more deep in load, but like trying to get Arc out into the world.

So where do you feel like that? I think it just depends on the use case. You know, for payments, probably the biggest corridors in which you could actually save money are maybe the south-to-south corridors. Like it is paying some of the countries

that's hard to get to today. Eventually you have tokenized assets that very well could be euro that's growing. But we're not there yet, as Hasif mentioned. Okay. So very milk-toast answer, but sounds like maybe euro? You think Euro is going to be number two in five years?

Five years, yeah, likely. Okay. Okay, so I want to ask you, like, all right, Tempo is kind of the most obvious direct competitor to ARC. What do you think are the advantages that ARC has over Tempo? Well, I think Arc is not a standalone blockchain. It brings with it the full suite of Circle Platform products. USC, ERC, USYC, and also the interoperability across chains through CCTV and Gateway

and CircleMIN connectivity to Fiat. It's part of a broader platform that I think we could support a lot of developers and ecosystem players to build stable coin finance as not just payment either. It is going to be about trading, lending, FX, payments part of it. but also just probably how can we bring stable coin finance to the broader world for institutions to adopt in ways that currently is not possible. And that's one differentiating feature. And the other part is, you know, we stated this in our light paper as well. Like we are starting out as permission validator set as well.

Most likely, I mean, we are committed to, most likely it will still be permission validated or set. Even after, you know, we also say we will have a transition to proof of stake at some point. even after proof of state, it most likely will still remain to be permission validators. Because we think that's what, at least, our understanding of the current regulatory environment, that's what is needed for institutions for mass adoption, because you want to make sure that North Korea is now one of the validators, for instance. And that is also a differentiating feature. But more probably, I would say, it's just everything that Circle Platform has will be on ARC.

How do you think about, I mean, the Circle strategy versus like the Tether strategy here, which you haven't talked about, which seems to be kind of, you know, supporting a few different chains, plasma unstable, kind of being two of the bigger ones and not kind of explicitly making something in-house, but kind of blessing these other chains. And, yeah, I don't know. How do you sort of, when you see them, what do you think of their strategy and how do you interpret it versus Circle? Yeah, I can't speak too much about our competitors. But, you know, I think where Circle stands for regulation, regulator trust, compliance, transparency, and as a public company, has an enormous amount of governance behind it as well. And we are launching ARC with that same set of principles of transparency, audibility, and sufficient amount of compliance and regulated trust.

I think those are just different set of features, and whether you could do that separately from circle or not, or from the main stable coin usual or not, I think that depends on the situation. But I think it's a pretty unique position. Okay, so let's switch gears a little bit and talk about the way in which the dynamic around stable coins, four chains, has been evolving. So obviously last week there was the USDA bakeoff, which ends up. it up in this very big, almost shift in the Overton window about the ability for chains to bargain with stablecoin issuers. It's something we've never really seen before, but Hyperliquid was kind of the

first to do it. Now, hyperliquid, of course, is an exchange. And exchanges have historically actually been able to bargain with stablecoin issuers famously Binance, adopting BUSD, which was issued by Paxos, and then later FDUSD. But we saw just in the last couple weeks, Megahith launched a, or is going to launch a native stable coin called USDM, which is built by Athena. And then Solana, largely seemingly jettisoned, not just a champion by Mert. Mert is saying that like, hey,

Solana as an ecosystem should come together and issue our own stable coin. Why is Circle getting all the yield when, you know, we have the big Solana cabala and we've got all these users and blah, blah, blah. And so there's almost this notion that I think is fairly new about maybe there should be collective bargaining, not just in a single application like hyperliquid, but an entire ecosystem.

So there was a lot of talk, and we discussed last week this idea that maybe the optimal equilibrium is not that hyperliquid has its own native stable coin, but rather that all of this is perhaps a gambit to go get Circle to strike a deal with Hyperliquid directly. So perhaps on Q, there was an announcement earlier today of Circle X Hyperliquid that says,

hey, USC is now going native on Hyperliquid. Circle. Now, Owens hype is exploring becoming a validator. CCTP V2 is now live on hyper EVM and will be moving to hypercore. They're launching builder and center programs for HIP3 EVM devs or hyper EVM devs. And they're bringing a bunch of liquidity onto hyperliquid. And now they're speaking in hyperliquid terms with putting hyperliquid at the end of their blog post. So it seems that all of a sudden a deal was struck, unclear what the details are here of like, okay, how much hype was bought? Is this a, Is this a commitment to continue buying hype? That's sort of like the equivalent of what we described. We're like, oh, are they like buying back and burning hype or something like this using some of the revenue from the USC and the bridge? But it seems like something happened here in response to the USDA bakeoff. So given that we have you here, Mr. Chief Economist would love to understand.

What are the economics here of the agreement between Circle and Hyperliquid? No, this is not in response to anything recent, right? We announced that we were launching USC natively on hype back in July, and actually our team started building it a lot earlier this year, right? So this is just accumulation of finally a product actually released today. It's on hyper-EBM today. CCPV-2 is live for hyper-EBM. But hold on, you guys buying hype that clearly was in response to this.

I mean, come on. Yeah, we have a corporate venture team that if you look at, and this is because of our public company, you can look at our other holdings, right? It's, we've been invested in the broader crypto community and ecosystem for a long time. We have other tokens on our balance sheet. And this is no different than how we have always conducted corporate venture and how we have always supported a variety of ecosystem. And we still believe very much in this multi-chain thesis. this. So I would say this is more of business as usual than, you know, in response to whatever happened, you know, in the past week or so. All right. I will say, I'll say for the record that I don't

believe, I don't believe you. I think this was in response to the massive USDA trauma, but I think it's also a very rational response. Terun, what's your take on this whole kind of stable coin chain, stable coin negotiating meta? You know, you said it's like a new. I think it's not that it's new. Like, clearly all, a lot of stable coins have had negotiations with centralized exchanges and like they announced their deal with exchanges, yes. Circle circles had deals, right, with finance and then OKX and stuff, right? So it's like, it clearly does exist. I think the main difference is it's not out in the open. And so the question is what the, how the strategy space changes when the entire bargaining process is open versus not. And like, I think obviously there,

you have two very different outcomes in those cases, right? We're like, in the, the public revelation mechanisms, like everyone naturally, you get to like zero faster in price, but then you also have sort of due to more competition, but oftentimes you maybe will get a substandard product. This is kind of like the standard economics analysis of procurement auctions when like a government tries to say like, hey, we have some resources. We want like people to give us bids, whatever, where it's like if you make it too totally public, then you actually get lower quality but like also lower price. And if you make it too restrictive, then you get like worse price than lower quality and there's like some tradeoff in the middle. And I think that's

what we're finding is that people are preferring partial revelation versus pure public. I think you're true academic on this subject. Look, you know that. I'm not trying to step on anyone's toes here. Yeah. Yeah, I think launching a stable point today, the novel standpoint, It's not hard, but launching a global scale stable coin that has the liquidity infrastructure, that has the primary market liquidity, connectivity with banks in every major markets. The USC had over a trillion dollars of primary market activity that is directly minting or redeeming with banks. Always have won.

It had over $40 trillion of unchain transactions. It has CCP that's connected and has instant cross-chain interoperability of. across a number of blockchings. That is something that's not just a ticker. It's not just a stable coin that you launch out of nowhere. It does come with years of building up the institutional apparatus, building up the market liquidity, building up all the banking connectivities.

So I think it's just you're kind of comparing apples to oranges here. So it's definitely true that, so put hyperliquid aside, Hyperliquid being in exchange, right? Like if you're a perp-dex, then like what you denominate your collateral with is actually not, doesn't really affect the UX that much. You know, like largely they can have USDA or whatever, any stable coin. And it's mostly the same experience to their users. For something like Solana, right?

So Salana is now talking about, oh, you know, Hyperliquid did this. We guys should, we should come together, assemble the vendors of Solana and, like, go collectively bargain, almost like unionize to go collectively bargain and, like, go get our own stable coin and, like, get the yield of our, And I think we talked about this on the last show is that like I, that seems to me much, much harder than for hyperliquid to do the same thing because the UX cost on Salana is going to be really, really noticeable to users, right? Like when you're moving around stuff and like trying to have to have liquidity and market

making on Jupiter and on drift and on this thing and like spot pairs and blah, blah, and like, you know, the bridging experience is going to be very half hazard for a lot of users and confusing. Imagine a world where there's a new Salinas Stabler stable coin. called USDA Manlet. And USD Manlet, it's like, okay, once you come into Salana, it burns some portion of the token, some portion of the yield goes to burn soul,

some portion of it goes to burn all of the major members of the union. You know, so like, let's say Jupiter and Drift and, you know, whatever, pump. So Libra with Burning, that's what I'm saying. Yes, totally, totally. Libra with burning, with buy and burn, right? Which is isomorphic to revenue. Like, in this world, I think what happens is that the moment,

let's say you're Jupiter. and you're like, cool, I'm going to create a fast lane for USD manlet and like it's going to be reduced fees or whatever. I'm going to put it on the front end. The moment that you see revenues start to get hit, right? Like just users are, users don't like that. They're like, why are you doing this? They'll be like, shit, I want out. I don't want to do this anymore.

Like, my token's going down. Can't we just go back to using USC? And in the process of to this was kind of PayPal, right? PayPal, which we talked about on the show was like this salon, obviously was not buying and burning soul. But it was the salonacoded stable coin that they were. were giving incentives to people within the Salana ecosystem to galvanize the adoption. And USC, as far as I know, I mean, maybe you guys were. I don't know.

But USC was just like organically adopted because it was dominant in defy. And USC won, despite the fact that the subsidies were all coming directly from PayPal. And I think we bet on it on the show. And we were right that basically PayPal USC was not able to grow to critical mass on Solana. So the reality is that users are very fickle. And they really want a liquid, easy to use, stable, that they don't have to ask, like, wait, what is this thing? Like, why am I now being forced to bridge into this other asset?

Which is less true when you're all within a single platform, right? Binance was able to do BUSD, but notice no other exchange has this. Right? No other exchange has this. Crackett is at BUSD, buyBid doesn't have buy USD. Like, I mean, Hobie had one back in the day. Hobie used to have one and it didn't, it, like, they were never able to get money to lost.

He just died on the vine and they went back to USDT. Well, it had, it was an interesting experiment. because if you looked at the data, like, the supply was like comparable to BUSD at times, but there was literally zero money velocity. Like there was like no transactions. You would just be like a huge mint transaction. And then two months later, that whole transaction would be burned or transferred to USDT or generally USDT in that case. And so I think the money velocity thing is very hard to replicate.

Like the you can you can make your new stable coin, but like actually getting adoption in like fee bearing things is very, very, expensive. The thing I, and this is sort of where I'm a little confused about how to reason about these kind of, you know, everyone doing stable coin as a service at the same time is like there was there's kind of this convergence, I would say. And to give them credit, I think like M0 probably was sort of deserve some credit for this for this like model of like, hey, you have some base stable coin and then you wrap it and add all the constraints that like your specific use case needs and you can redeem to the base coin and then trade so that you have like some type of fixed numeral. The thing is like if if there's five, you know, I think there's a version of the

world where you're a dominant stable coin and then you offer this kind of white label wrapped service for people. It makes a lot of sense. But like when there's like 10 different new stable coins all trying to offer like our benefit is that we will wrap like the M0 USDG, etc. Like we will be stable can as a service. It does feel like it kind of dilutes the value of the liquidity advantage that you have for trading. And I don't think, it seems really hard to bootstrap those things when it's like their value prop is diluting their own brand on launch. And so like, that's something that I think you probably have some opinion.

Yeah, I mean, let's just remember that at the end of the day, it's the users that's making an adoption choice. It's the users that's choosing, you know, one stable coin for its liquidity, for his trust, for his reliability and stability. you can't force users to convert. That force conversion goes against the very basic premise of crypto, which is not your keys, not your tokens. So there are some exchanges I tried this before,

and I think one of the regulators stuff basically told them not to do that. You can't just force people to convert. And instead, it's really user-driven. What do they prefer to use? Is it the liquidity that they prefer or some other features that they prefer? And I think liquidity does matter a lot, but also the trust and the branding matters quite a lot as well. Well, Tom made the point last week is that with these turnkey stablecoin solutions, right, like the agoras and the Paxosos of the world, it does feel like the trust deficit has been made up compared to what it was like in 2020 or 2019. Is that back in the day, you launch a new stablecoin, people were like, oh, there's probably, you know, like this must be like some shoestring thing and some shady geography.

You're telling me my basis cash holdings are not real. No, I'm kidding. Now people mostly do assume that if you launch a new stable coin, it's probably safe. It's probably regulated. There's probably somebody keeping an eye on the, you know, the reserves are sitting somewhere. But, you know, to Gordon's point, like the benefits of having a global stable coin that is just, you know, has banking relationships everywhere and has really tight spreads everywhere and has always, always has liquidity. And you never have to, like, call somebody to be like, hey, I need to move five million bucks. and like there's no liquidity on this pair,

just never happens for a circle. It's part of the reasons why money has a network effect. Like that's why, you know, we're talking about the US dollar having 99% dominance in stablecoins. Why is it? It's a network effect. So it's true, stable coins too.

But what's fascinating about stable coins is that, you know, once point of time when stable coins were in their infancy. So, you know, back in 2017, 2017, there was just tether. USTC had not been created yet. And at that time, I think most people, myself included,

assumed that stable coins had a very natural network effect and as a result of natural monopolies, right? Is that there's going to be one stable coin. It's going to be totally dominant. Everyone's going to use that stable coin. And that's not what we've seen. What we've seen is like more or less a duopoly where there's tether, their circle, and then distant third is Athena, which is synthetic dollar, high yielding asset, very different

than a fiatback stable coin. And then it's just tiny, tiny peanuts, you know, of the people who are ranked after that. And that's surprising. It's a surprising outcome. And part of the way that that has played out is that there are these cleavages in the market that really weren't obvious ex ante that like, oh, you know, Circle is dominant on chain. Tether has almost no adoption on chain. But then when it comes to, you know, you go on the ground in, you know, Turkey or Venezuela and like everyone's using Tether and nobody, you know, a lot of people haven't even heard of USTC. And so there are these sort of subsections of the market that have very dominant market positions in one stable coin or another.

and so I don't want to preclude the possibility that that may also be true for some subsets that we haven't thought about yet, right? So maybe it's possible that in Solana that's a subset that's small enough that you could get one statement. I think it's difficult. I think it's very, very hard

because all of Defi is connected. And so anything that's on Solana, like people are arbing and moving across bridges to get the liquidity from Ethereum onto Salana, it's possible something like Solana could do it. But there's no way that Ethereum could do it. You know, Ethereum is just, like Ethereum cannot

collectively bargain in such a way to close the doors to prevent USTC dominance on chain from making its way into Ethereum, right? Whereas Salana, like, it's a coordinated enough ecosystem that they actually kind of could, maybe. I still think they probably wouldn't, but it's possible at least. But the really big mature ecosystems, like Ethereum, there's just too many players and they don't all know each other and they don't, like they'd never gotten on a Zoom call together. So, like, it would just be impossible for something like that to happen on Ethereum, I think. Just echoing one point, you mentioned that a lot of today, you can trust a lot of stable coins. But, you know, the rules for Genius Act hasn't really kicked in in full effect.

One of the provisions in the Genius Act is, you know, stable coins cannot pay users directly in interest. And I think that's going to actually, you know, some of the stable coins that spend out of their marketing interest payment. I don't think that actually qualifies under the Genius Act. So we'll see how the market develop. Yeah, I mean, I think of it a little bit honestly like kind of community banks or kind of like there is also, I would say banking is kind of similar in that you have like, okay, there's what like seven G Sibs and then it's like, yeah, this is like the Idaho public trust or whatever. And it's like, why would anyone bank here? And certainly part of that you could say is, you know, FDIC is sort of supporting, you know, community banks. But they're all obviously like weird idiosyncratic factors that like not everyone makes a purely rational economic decision. Right. Some people are like, yeah, they have a branch down the street from my house and they have a shirt. and they sponsored my kids little league team and that's why I bank with them. And like I could see something like that honestly happening. And I would say that stable coins that exist in kind of this long tail are somewhat similar

where it's like this is just the way this got distributed and it's popular in this ecosystem. And like I don't know where that kind of like what the kind of carrying capacity of an ecosystem is to like require you to be sufficient to actually have a stable coin be lives. But like I also would not be surprised if we just continue to see these like small little pockets. I was kind of joking with someone the other day around these kind of like crypto neobank kind of things that we've seen popping up. And I'm like, I could see something like this happening for like discords or like, yeah, this is my Minecraft server, you know, Neobank. And we all have the same, you know, your stable coin. I will say like at that point, the branded stable coin feels more just like a credit card than it feels like it's like, you know what I mean?

It's like it's like your rewards points are special for your particular credit card rules versus something. is actually the one thing I think that's interesting about this, this like kind of custom stable coin thing that is it feels like it feels like money the way like the bait like the UST and USCC really do feel like money. Like if you're going to like these kind of wrapped branded versions then it's like it really seems much closer to a credit card. I know you're saying like a local bank, but it feels a little more like slightly better distributed than your local bank. Right. Like, but yeah. other disinology with your local bank is it's more like using a local currency, right? Whereas a local bank, like, you're still using dollars and like you take it out of the bank,

you know, nobody's. Yeah, yeah. I mean, all of these are dollars. I think the question is like where, like what level of abstraction is the one that is going to, you know, like actually users are going to interface with? Are they going to interface directly on the raw metal with USC? Or are they going to interface with, you know, Starbucks USD? And I think it's still undetermined where, where that's going to actually net out. I think what's more plausible. Right. So take hyperliquid as an example. The reason why hyperliquit can do this is that once you put your money in hyperliquid, it's collateral, right? You're not experiencing like, oh man, USDA, nobody takes it. Isn't that annoying? Right. Like at least within hyperliquid core, the core exchange, you don't have this direct experience of like, oh my God, this is so annoying to hold this USDA. But I think it's largely true for apps that have a like long holding period. Right. Let's say you're, you're in an app where you deposit funds and then they just kind of sit in there, say Polymarket, right?

You deposit funds into Polymarket. Polymarket could say, okay, you deposit USC into Polymarket. And while your deposits are here, we actually unwrap them, swap them into Polymarket USD, and we don't tell you, right? We basically are just like, oh, user doesn't need to worry about this. And so the assets are all sitting in Polymarket USD, and then once you want to redeem, then they take you back out. And basically that is isomorphic to Polymarket just saying, hey,

circle, strike us a deal. When we have deposits, give us some of the yield when they're in our platform, which is exactly what the exchanges do, right? The exchanges that have deals with USTC, that's how it works. So you could do that, but it sucks. Like, it's a terrible, it's really bad and like your users aren't going to like it. But that forced conversion, it's not transparent. Yeah, but that force conversion, I think, goes against both crypto principles, but also consumer protection issues of, you know, you basically didn't tell your users and converted. Right, right. So you have to do this in a transparent way that, like, hey, when you deposit here, but like the point is the user doesn't have to go and like swap to go find polymarket

USD or whatever because that's going to, if they do that, they're going to lose users. Yeah. So this is what I was referring to earlier when I called it sort of the M0 model because I feel like they were sort of, they wrote the first stuff about this and kind of have the first contracts. And then I feel like everyone just kind of used the same type of model of like for these kind of stable coin as a service type things. But I feel like those don't feel like real stable coins themselves because like the thing that they convert to is a stable point. But the rapper itself is like some type of like almost like

line of credit to the underlying thing. It feels more like a credit card. I don't know how else to describe it. Like it doesn't. Would you mean it feels like a credit card in the sense that there's like branding on it? And it's like, oh, this is like the Mickey Mouse visa. Well, you're opting into extra covenants, right? It's possible that like that, you know, the polymarket UST. Let's suppose it's on one of these stable climate service platforms. There's Polymark USC and culture USC. Let's suppose for simplicity, they both are using the same one. So they both can convert one to one to this base stable claim. And let's say you're an arbitrage trader, trading like arbitrages between the equivalent

polymarket market and the Kalshi market. You are willing now to hold both Kalshi USD and polymarket USD because you don't think of them as different because you can net settle, right? You can convert them and deal with that later. And I think that sort of type of thing feels a little more like I have this collateral that's in the base thing. And then each of these markets is lending me money locally. And then they give me some guarantee and conversion. That part feels like a credit card more like, right?

They're giving you a like a kind of a promise in the future that you can always redeem for this other thing. But we're going to let you have you. We're going to give you our local currency. Right. And that's like a credit card sort of like the end user. experience feels like a credit card to me. Yeah. I mean, I don't think there's going to be like you check your wallet and you have like, you know, a hundred different companies, you know, dollar stable coins in it. I think it's maybe more. And I think some apps have to do this today, like you said,

for like Polymarket where it's basically like a treasury product. I mean, it's kind of like a bank, right? You give banks dollars. The dollars aren't just sitting there. They're being lent out and, you know, then you get the back and they're kind of being backed one to one. But, you know, for people who are big enough, maybe they can strike deals directly with issuers. But if you're not big enough, then, yeah, maybe this is what you do to get yield if there's not really another option. And again, as long as you're transparent and I think you have robust controls in place, I don't think people will be so strongly opposed to this. I mean, a lot of companies already, you know, do this today effectively. But like it's a bunch of Kulsi-USD bank run, because like the assets are lent out or something,

that would be very weird. That'd be very weird. That'd be a very weird. That'd be a very weird outcome. Yeah. You can't deposit. You can't withdraw from this platform. It's kind of like a gift card or like credit in an app, right? Where it's like, yeah, if, you know, you are using bedbath and beyond and you pre-charge under bucks and they go bankrupt.

Yeah, your, your assets are working. This gets back to this idea that it has the U.S. of a credit card or gift card to the end user. It doesn't have the U.S. of money in the sense of like. If you, if I have like Amazon gift dollars or whatever, I am a, a what about I'm a secured creditor

if Amazon I don't have been secured I don't know I don't think you're I don't think that's not a security Amazon credits are

bankruptcy remote yeah and that should trade at a price right that should trade at a discount to something

that's totally they trade like 95% a dollar yeah and I think if I remember correctly there have been

cases where like companies that were really big would like split off a finance division

that would like manage the credit cards and like it's happened where like the finance division went bankrupt

and like your card was useless, but actually the business survives. So, so like, I don't know how that will end up in this stable coin, white label stablecoin thing. But I think the defining characteristic seems to be like, if people can't convert to you directly, like they have to go through some other medium, you're like a second class thing. And then you're not really like money. You're kind of like this gift card, maybe credit card, encumbered type of thing. Whereas, you know, if you're the base stable coin, like, you really just depend on that liquidity. And this is why I guess it's like weird to me. There's like this huge glut going to the market at the same time.

Like that's the thing I don't get. There's like so much supply that is the demand there. That's what I can't reconcile. Like there's just everyone that's trying to do. And obviously the regulation change makes it more favorable to do this, right? But it feels like there's so much supply. And maybe I'm wrong. I don't know how you feel about it.

The supply of what exactly? of like people offering these white label or stable coins of a service type of thing. Like everyone is going to market with supply. I have yet to see that many demand generating. I think people don't understand how hard it is to actually build out a liquidity network at a global scale. I mean, I think, you know, a year ago, I totally would have agreed. I think the thing I, I don't, I mean, I think this is a smaller chance that this happens, maybe like 10, 20%, but like, I kind of worry that you see this like,

preference cascade now that like hyperliquid and Meg Eath and maybe Solana and maybe others. And like eventually it's like the next smallest player after that says oh well like if blah blah blah blah chain has it well I should also have it. And then you know the chain has it then I should also have my own stable coin. And like it's like where does that window stop? I don't know. But I would have thought it would have been much bigger than hyperliquid again a year ago. And now it seems like maybe it's actually much smaller. Tom Turtles all the way down Schmidt.

Yes. We have not actually seen USDH go live. And like, again, just to remind everybody, the USDA explicitly said, we're not moving any of the USCC in the bridge. We're not forced converting anything. We're not giving any advantages. So it may well be that like USDA is just like PayPal USD, which is like, yeah, you know, please use this. And like people don't use it because they're lazy. And they just want to use the safe thing, which is USC. Or is it just the more liquid thing, right? I mean, it's been around forever and people already obviously have all their money in USC. Yeah. I think I look at like the story of, oh, go I think I look at BUSD and I'm like BUSD was actually working and winning, right?

And it got shut down by U.S. regulators sort of prematurely. But I think if you don't have that. Yeah. Well, I'm saying like that whole pattern, that strategy of distribution was working. And now in a world where maybe U.S. regulars aren't going to step in or you can do a regularly regularly compliant way, like someone is going to run that back. And I think that's kind of the pattern I see often in crypto is like someone does something. It gets unnecessarily shut down.

in some way. But everyone's like, oh, that was actually a good idea. They just made this error, and then someone else runs it back and does it successfully. And like, I don't think we've seen the end of the BUSD strategy. But the point I made earlier is that, look, the other big exchanges don't do this. Right? So like these other big exchanges are bigger than hyperliquid, but they do not do the BUSD strategy. By the way, the BUSD strategy worked for the following arbitrage reason, which is there were entities who could actually mint BUSD in New York and met all the requirements, and they could basically mint, sell the assets on finance for more than what they bought it for because they're sort of implied yield that was priced into BOSD.

Because, like, finance was effectively a place you could get like 7% on BOSC pretty consistently during its lifetime. And so there was a huge demand for buying BUSD just to earn that yield. And so there's this gap of like roughly 7% that was sort of being arbitraged by people who had the regulatory ability to mint BOC versus like people who are users. And that feedback loop is very powerful. I think the yield aspect of it was really powerful. Also the idea that like finance incentivized liquidity for the Bitcoin BEOC pair was insanely liquid.

Like I think the spreads on Bitcoin BOC and Bitcoin EOCT, which is like the most liquid pair, were within like three basis points of each other for months, which is like insane when you compare it to other exchange schemes. Didn't they also cut the trading fees to zero on like Bitcoin versus BUSD? Yeah. And to Gordon's point, they had forced conversion at a certain point. So yeah,

there are a lot of levers, a lot of carrots and sticks you can use. You're right that like, hey, maybe in a world where all the exchanges just are able to get 100% rev share or rev share that they feel is fine. Maybe they don't feel they need to do this. But like the threat is out there, I think.

Well, there's another weird microstructure thing about this. Like in the normal economy, you think of money creation from like banks making loans. And then like that is like the synthetic creation. This idea that the money creation is due to this like yield arbitrage is like slightly different than just like a loan creation. Because the duration risk isn't held by the person who did the money creation. It's like the exchange traders who are holding that risk. And I think it's like a very different equilibrium than what you're used to for money creation. where in the normal case, a bank is doing money creation via lending,

well, they're holding duration risk. Like, they're not just, like, lending and, like, getting the money back immediately. But in these stable coin kind of new stable coin kind of things, you've seen this thing where it's like they've needed this very low duration yields that they can harvest in order for it to grow. And I don't know. No one has ever explained that phenomenon to me. I feel like it looks very, that is one way in which stablecoin seems fundamentally different

from like bank money creation that BUSD is like this case study of. And it may also be the case study for all these future kind of white label statements. Like I don't know how they do that. And obviously maybe I'm just too small-minded and I don't see the great growth story. But like that is what I think people are trying to sell you right now, right? I don't see how you can sustain a high yield that's just way different than what the save asset yield is. if you are fully Fiat-upak stable coin. We've seen this with many stable coin,

and most notably with Terry and Luna. I think we can all agree. We don't want to repeat of that happen. Yeah. So, I mean, there's always some degree of subsidization when you're trying to get a new stable coin off the ground, but you're right, like in equilibrium that can't work. But the other thing is that, you know,

as rates start to go down, which, you know, whatever, we've been saying this now for two years and rates have been very stubbornly high, but as rates find out, certainly start to go down. It looks like we're getting a Fed cut, perhaps at the next Fed meeting, that I suspect that more of the stablecoin issuers are also going to be charging more on mint and redeem and moving their business model away from just yield on the reserves and more on the mint redeem complex, in which case, Turun, like a lot of that stuff actually becomes

less economical because you're paying the entrance and exit tax when you're coming in and out of the asset. For sure. I'm just saying that somehow this is very different than the normal economy. And like, I don't exactly know how, how that will play out because it does really change the notion of velocity of money creation versus like a normal, the normal fias system. But I do take Tom's point that ideas in crypto are very contagious and this idea that like, oh, hyperliquid should like go negotiate and like have its own stable coin. That does feel like probably a contagious idea. But ideas also, there are very few ideas that are like stubborn. And this doesn't feel to me like a stubborn idea. This doesn't feel to me like, okay, if like USDH doesn't work and then

like the Solana, man like coin doesn't work, will people stubbornly like just do whatever it takes to make it work? And I think the answer is probably no. I think they'll probably just be like, ah, that didn't work. Oh, well, I guess let's go back to just using the stable coins you've always used. Okay, what do you, let's see, let's see, what do you think is going to be the most likely successful stable coin after USDT and USCC? Like, what do you think the third place will be? in the given this current environment. Do you count Athena as a stable coin or do you say it's kind of different? Yeah.

Okay. Let's say after Athena. Let's just do, let's do it. Fourth place. I think, well, to my earlier point,

like you, you sort of have to carve out a different part of the market that right now is either underrepresented or just like, is really just kind of a green shoot and starting to grow. I think in a way, like, if you think about Circle and where Circle's early adoption story really took off, a big part of it was actually DeFi Summer, right?

like the explosive growth of defy was a big part of how USC really consolidated its position as being a dominant player and Tether just ignored DFI. They just like didn't really take it that seriously in the beginning and like didn't actively try to make it successful in DFI. And I think that was to their loss

and now you can see how much of the total supply of Circle is just sitting in DFI. So I think the same thing will be true is that there'll be some weird thing that people are doing with stable coins that Tether doesn't pay attention to, circle doesn't pay attention to. Maybe it's even one of these things

that we're talking about now that's like, yeah, you know, yeah, maybe someday people do this, but they're not doing it right now. One of those things, some startup will be like, yo, that's all we're, that's all we're going to focus on, is just growing that little tiny seedling, and that's going to be our just complete mission, and they'll get to own that vertical once it arises. So I don't know what that is, but if I, you know, if I did, I'd be betting on it, but I have no idea what that would be. And we welcome startups, we welcome startups to build an arc, regardless of what stable coin you start with. I also think somewhat disagree with you,

like USC took up in D5 summer just because it was first there, right? It's also because it had the stability. It was still packed to the dollar really well. If you think about a lot of these DFI traits, you're looping around multiple times. You basically can't loop around if you're going to depagmines in a while. That would just like kill the liquidity. I mean, it just like you kill the collateralization ratio.

So you had to have that stimulus. a very simplified explanation because that was also the time when people were very worried about tether depegging and about like oh is the money really there and so on and so forth and so so USC had a much more trustworthy institutional brand that went a very long way for for ustac to get adopted in defy okay we're going to wrap it up Gordon anything you want us to be on the lookout for or that you want to show for the audience before we log off look out for the test night launch public test night lunch of arc that's upcoming Thanks, everybody.

See you all next week. Thank you.