Stablecoins and Real-World Assets: The DeFi Revolution

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Get ready for a wild ride through the world of crypto, because the 2024 US presidential election was a game-changer for the industry. And guess what? Bill Bryson is here to guide you through the twists and turns of DeFi, stablecoins, and Real-World Assets (RWA). 😉

So, buckle up, grab your favorite beverage, and let’s dive into this thrilling adventure! 🍻

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Stablecoin and RWA adoption transform the crypto landscape

The stablecoin sector is set to show significant growth as regulation standards emerge. A regulatory framework was introduced with a stablecoin bill proposed by the US House Financial Services Committee. It establishes rules for the stablecoin issuance, backing assets and the reserve ratio, reporting regulations and regulatory oversight. This legislation, if passed, will mark the first comprehensive crypto regulation in the US and may support widespread adoption of stablecoins and blockchain-based payments. 💸

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Crypto in traditional finance: A growing collaboration

TradFi has recognized the potential of stablecoins and is increasingly engaging with the industry. Beyond crypto-native stablecoins such as USDt (USDT) and USD Coin (USDC), companies are developing stablecoins tailored for cross-border payments. For instance, Ripple introduced RLUSD, designed specifically for corporate transactions. Meanwhile, Stripe’s $1.1 billion acquisition of Bridge — the largest in the crypto market’s history — highlights the growing role of stablecoins in global payments by integrating fiat and stablecoin solutions for businesses.

RWAs have gained significant attention in recent years, and their onchain value increased by over 60% in 2024 to reach $15 billion. This growth was primarily driven by the collapse of unsustainable onchain yields. Due to their ability to maintain stable yields in bearish and bullish markets, RWAs have become widely adopted by crypto retail users and professionals alike.

New opportunities for DeFi

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As Tether’s annual revenue from T-Bills hits $10B, the potential for a revival of yield-bearing stablecoins has gained attention. These stablecoins are categorized into two types: those backed by T-Bills and those supported by onchain arbitrage strategies, such as delta-neutral hedging or MEV arbitrage.

In 2024, the market experienced significant growth in yield-generating stablecoins. Ethena’s yield-bearing stablecoin USDe has become the third-largest stablecoin with over $5.5 billion market cap.

Collaboration with TradFi on RWAs offers significant opportunities for DeFi protocols. For instance, Ethena recently launched USDtb, a stablecoin primarily backed by shares of BlackRock’s tokenized US Treasury fund, BUIDL. This structure strengthens USDe’s stability during adverse market conditions, including periods of negative funding rates. Recently, Ethena’s Risk Committee approved USDtb as a USDe backing asset, allowing the protocol to close hedging positions and reallocate backing assets to USDtb during market uncertainties.

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Disclaimer: This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon. CryptoMoon does not endorse the content of this article nor any product mentioned herein. Readers should do their own research before taking any action related to any product or company mentioned and carry full responsibility for their decisions.

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2025-02-06 18:05