With a supply of more than 246.382 billion US dollars, how can Ethereum support the widespread use of stablecoins?

In the Ethereum ecosystem, stablecoins play a key role in trading and lending scenarios. Not only can they serve as the underlying assets for participating in decentralized finance (DeFi) activities, they also play an important role in driving Ethereum's overall transaction volume and asset liquidity.

Author: imToken

Cover: Photo by Shubham Dhage on Unsplash

In 2025, the stablecoin market will continue to grow rapidly. According to DeFiLlama data, as of May 26, 2025, the total supply of stablecoins (i.e., market value) has climbed to approximately US$246.382 billion, accounting for approximately 7.04% of the total supply of crypto assets.

This data is 9.5% higher than the data in the "2025 State of Stablecoins" report released by Dune and Artemis in March 2025, which states that "in 2024, the total global stablecoin supply will grow to US$225 billion", showing the rapid expansion of the application of stablecoins in the crypto asset ecosystem.

According to OKG Research, under the optimistic scenario that countries gradually set up compliance frameworks for crypto assets and institutions and individuals widely adopt stablecoins, the global stablecoin market supply is expected to reach US$3 trillion in 2030, the monthly on-chain transaction volume will reach US$9 trillion, and the annual transaction volume may exceed US$100 trillion.

Stablecoin Market Overview

At present, the stablecoin USDT issued by Tether and the stablecoin USDC issued by Circle still dominate the stablecoin market. According to data released by CoinGecko in May 2025, the supply of these two stablecoins together accounts for 86.06% of the overall supply of the stablecoin market.

USDT

In May 2025, the total supply of USDT exceeded 150 billion USD for the first time, reaching 150.663 billion USD, accounting for 62% of all stablecoins. Its growth mainly relies on the payment demand in emerging markets, especially on TRON, where the trading performance is particularly active, with an average daily trading volume of nearly 30 billion USD.

In April 2025, Tether CEO Paolo Ardoino published an article stating that the number of users of USDT increased by 13% in the first quarter of 2025. Currently, the application focus of USDT has gradually shifted to the P2P remittance market, and its adoption by institutions has been declining.

USDC

USDC issued by Circle accounts for nearly 25% of the stablecoin market and is the second largest stablecoin in the market.

USDC publishes monthly audit reports through a third-party agency, complies with the EU MiCA Act compliance requirements, and has established application cooperation with currency payment institutions such as Visa and Mastercard; mainstream DeFi protocols such as MakerDAO, Compound, Aave, and Curve also support the use of USDC.

Emerging stablecoins are gradually emerging

According to the "2025 Stablecoin Report" released by Dune and Artemis, in addition to the two major stablecoin giants USDT and USDC, algorithmic stablecoins also maintain active applications in the DeFi ecosystem, and third-generation stablecoins (such as USDe) that use a hybrid collateral model are rewriting the market landscape.

Other emerging stablecoins that have received widespread attention in the market recently include: USDE issued by Ethena Labs, whose total supply has grown to US$7.082 billion in May 2025, making it the third largest stablecoin in the world in terms of supply; the total supply of the stablecoin USD1 issued by World Liberty Financial, a DeFi platform under the Trump family, in March 2025 has rapidly expanded to US$2.133 billion; the total supply of USD0 has reached US$641 million.

Application of stablecoins in Ethereum

In the Ethereum ecosystem, stablecoins play a key role in trading and lending scenarios. Not only can they serve as the underlying assets for participating in decentralized finance (DeFi) activities, they also play an important role in driving Ethereum's overall transaction volume and asset liquidity.

Trading scenario:

According to Techinasia, the trading volume of stablecoins on Ethereum reached $908 billion in April 2025. In this growth trend, USDC has performed outstandingly, with a trading volume of more than $500 billion in the past six months. Other stablecoins, such as DAI, also show active trading trends.

Lending scenarios:

DeFi protocols such as Aave and Compound on Ethereum support lending services for multiple stablecoins. Users can deposit USDT, USDC, or DAI to earn interest, or use these stablecoins as collateral to borrow other assets. For example, Aave provides collateral services with an annualized yield (APY) of up to 14%, and Compound also provides related services with an annualized yield of up to 12%.

Payment scenario:

In 2021, Visa announced the use of USDC for payment settlement on Ethereum, becoming the first major payment network to use crypto assets for settlement.

Stablecoin payment platform Alchemy Pay has partnered with Ethereum Layer 2 network ZKFair to allow users to use USDC to pay for gas fees, enabling more users to easily purchase assets.

Practice in cross-border settlement:

StraitsX has issued the Singapore dollar stablecoin XSGD and the Indonesian rupiah stablecoin XIDR on Ethereum and Zilliqa, aiming to address the high costs and inefficiencies in cross-border payments.

Case study of combining Layer2 solutions with stablecoins:

• Tether and LayerZero jointly launched a multi-chain version of USDT - USDT0, which is based on LayerZero's Omnichain Fungible Token (OFT) standard. It realizes cross-chain transfer without intermediary bridging or packaging assets, and improves the liquidity and usability of stablecoins.
• MStableChain proposes a system that supports multiple stablecoins as transaction fees, aiming to provide stable transaction fees and flexible payment options. The system ensures compatibility with the Ethereum Virtual Machine (EVM) through multi-currency units and multi-type RPC mechanisms, promoting large-scale adoption.

Regulatory compliance examples

• Hong Kong, China: On May 21, 2025, the Legislative Council of the Hong Kong Special Administrative Region passed the Stablecoin Bill, marking Hong Kong, China as the world's first jurisdiction to establish a full-chain regulatory system from fiat currency to stablecoin.
• United States: As of May 22, 2025, the US stablecoin "GENIUS Act" has entered the revision process. The core of the "GENIUS Act" includes key contents such as issuance qualification restrictions, reserve requirements, compliance obligations, user protection and international applicability. The bill clearly stipulates that the issuer must fully support the stablecoins it issues with equivalent high-liquidity assets to ensure that users can redeem them at any time. At the same time, in order to protect the interests of coin holders, if the issuer goes bankrupt, its assets should be used first to repay user funds. In addition, the issuer must strictly comply with compliance obligations such as anti-money laundering (AML) and counter-terrorism financing (CFT) to prevent stablecoins from being used for illegal purposes.
• EU: The MiCA regulatory framework will take effect on December 31, 2024. It requires the reserve assets of stablecoin issuers to be transparent and auditable. USDC was adopted by Worldpay and other institutions because it was the first to obtain MiCA certification.

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