The era of stablecoin 2.0 has arrived: In the midst of the great wave, who will rise and who will fall?

Stablecoins are a type of digital token pegged to fiat currency (usually the US dollar), essentially a set of standardized smart contracts. They are neither fiat currency nor the same as central bank digital currency (CBDC).

The former U.S. government had a friendly attitude towards stablecoins, believing they could help solidify the dominance of the dollar. In contrast, they opposed CBDCs, arguing that they could strengthen government power and infringe on personal freedoms. The EU and China have taken the opposite stance, supporting CBDCs while imposing stricter regulations on stablecoins.

With the clarification of the stablecoin regulatory framework in the United States, the stablecoin network will be deeply integrated into the existing dollar system. This will trigger unprecedented fierce competition in the stablecoin sector. Some large financial institutions have already begun to enter this market.

Stablecoins are primarily used for value storage, medium of exchange, and payment. These functions are fundamentally derived from the fiat currency they are pegged to. However, the rapid confirmation and programmable features of stablecoins greatly enhance their efficiency in cross-border transactions and settlements, far exceeding that of traditional SWIFT systems. Currently, the annual settlement total of stablecoins is twice that of a well-known payment network.

In the first wave of stablecoins (2018-2019), project teams focused too much on licenses and assets, neglecting liquidity network effects and user experience, which led to the failure of most projects. In the upcoming second wave, as the regulatory framework becomes clearer, the focus will shift towards asset scale, liquidity network effects, and user experience.

In addition to stablecoin projects launched by some large financial institutions, a large number of emerging stablecoin projects are expected to emerge.

For ordinary investors, this wave mainly offers two investment opportunities: one is to participate in the yield farming of decentralized CDP stablecoin protocols, and the other is to focus on stablecoin infrastructure projects. The latter is relatively simple and more suitable for most people.

Stablecoin infrastructure projects are mainly divided into two categories: liquidity support projects and new application scenario projects for stablecoins. These projects provide important support for the stablecoin ecosystem and may become key areas for future development.