From 5 Stablecoins to 1,000 Deployments: The Infrastructure Gap Hiding in Plain Sight

Transcript

Test. Okay, cool. Hello everybody. Good morning on this beautiful Monday, even though we can't see sun, it's a sunny day out there. Um so today I'll be talking about um from five stable coins to 1,000 deployments, the infrastructure gap that's hiding in plain sight. My name's Jackie. I go by Aga Perste on chain. So before I got into crypto, I was doing technology on the tradfi side, and then I got snatched into the crypto data land, where I work for 3 years looking at on-chain data, and then I wanted to go a little bit deeper into a vertical, which is where I went to um Uniswap Foundation to lead the data side of things, um and now I am leading the issuance data for uh Bridge. So if you

don't know about Bridge, Bridge is a stable coin infrastructure company where we work on money movement, on-chain, off-chain ramping, we work on issuing stable coins, and we also have stable coin backed cards. Okay, so you probably are feeling this already. Today we live in a proliferation age, a proliferation age of stable coin markets. So there's over $315 billion of total supply on chain according to DeFi Llama. Um and then we have more than 300 stable coins to plot deployed across almost 50 chains. That's almost 1,000 deployments on chain. So that's a lot, right? Um and out of those since 2023, the um USD

stables in particular has tripled, more than tripled actually, from 62 203 stable coins. Um and all these stable coins are also growing. There's more than 10 of them that already exceeding $1 billion supply. That is That is a lot if you count like in seconds, right? I think like 1 billion is like maybe like 30 30 years old or something, something like that. It's like a It's a lot to get 1 billion. Oh, this might be the part I have a YouTube video that's supposedly showing a dynamic graph of all the stables that's reached 1 billion of how fast, you know, just they're reaching [laughter] 1 billion.

So the point of this YouTube video is supposed to show that the speed that these stable coins are reaching $1 billion supply is accelerating. Uh so here I've listed a few examples. We've got rUSD in 300 something days, and then you fast forward to 100 something days, 44 days for USDs, um and then finally we have 35 days for USD 1. So very, very short amount of time. Oh, okay. That's that YouTube video. Okay, so we have multiple stable coins, right? We have like over 300 stable coins. We have many, many chains, like 50 chains. And then you also have different like bridge variants. There's like native mint, and there's like CCTP, and there's like Layer Zero, and then before there's like Axelar. So you would

actually expect what? Liquidity chaos, right? You would like think that probably liquidity fragmentation is the biggest hindrance in terms of adoption. But not actually if you look at the on-chain data. Okay, so if you look at the um I just sampled a few stable coins. Obviously the top one and two, USDC and USDT, and then the um number five through 20, I've got USDs and USDE, and then Cash just as like more of a younger stable coin um from like uh beyond the 20 rank. Um so if you look at all of them, the supply per token is incredibly concentrated on like one to two chains. So we're very familiar with USDT, right? It's

basically Tron and Ethereum dominated. Um more than 92% of the supply is on these two chains. USDs, it's like 77% like a lot of it on Ethereum, a lot of it is is it on Solana. And then we've got USDs with uh more than 94% on Ethereum. Yada yada yada. And then with Cash itself, it's only live on on uh Solana. So like 100% of it is on Solana. So basically, there isn't really like a fragmentation in terms of chains per stable. And then I mentioned about like the bridge variants, right?

Um and if you look at it, the number of bridge variants, for example like I looked at it, I was like, "Oh, like Optimism back in my days, it was bad. There's like six variations of the bridge tokens. Like it must be bad." And I was really surprised to to find that the number of bridge variants doesn't equal to fragmented liquidity. So the liquidity in terms of like the bridge like per chain, how many variants there there are are like incredibly concentrated. Um so here I sampled for USDC and USDT. And the width of the bar is basically um how many how much supply of that token uh per chain. So here we can see like Ethereum, Solana for USDC, and then Tron and Ethereum for USDT. And then

within each bar, you can see the um supply composition of each the of the bridge variants. So like based on color, you can already kind of see that it's pretty pretty, I guess, uniform. It's like most chains just have one bridged variant. Um with I think Polygon, there's like a bit of a split, 50 Well, not 50/50, but like 58/42 split. And then Polygon is like 60/40 split. Um so bridge variants is also not an issue. But if we think back to in the beginning, right? We talked about there's a proliferation of the number of tokens. Um we still largely live in this world of a duopolistic world of like USDC and USDT. So if liquidity

fragmentation isn't the hindrance to success, what is so hard about making a stable coin? Right? Like what is standing between you clicking "Okay, I'm going to mint a token" to "Oh my god, my token has made it." >> [laughter] >> So here are, I guess structurally, like six things in my head that are harder than just minting. So first, uh we talk about compliance. Um acknowledging that there are use cases for stable coins out there that are just fully decentralized, right? But here like for the majority of use cases, especially as we have the tailwind of a regulatory compliance, uh most of the stable coins that people want to issue um need to be compliant because they want to compliant use it. So compliance is like a big word, many, many things

involved around it. Um second thing is actually reserves. Um I mentioned I just uh got into the stable coin world not long ago, and one of the things I was really, really surprised is how much complexity there is to just like, "Okay, you have a one-to-one backed stable coin." You would think it's really, really simple, but it's like not. So you think about the uh split of the reserve, like how much of it you want to put in treasury, how much of it you want to just put in like liquid uh fiat USD at a bank, right? And then when you want to think about the treasury, it's like the relationship you have with these custodians, BlackRock, Fidelity, um even like the on-chain ones super state, you need to talk to them, you need to like get it done, and then you need to open

all the accounts. It's actually a lot of work of work. So related to the reserves, it's the operational complexity that comes with it. So just taking reserve as an example, if you have a one-to-one backed stable coin, you need to you have money movement all the time, right? You're on-ramping, you're off-ramping. That means you would have to rebalance your reserve. Like that that's that's a lot to make sure like every day either it's recon going, and then every time you do something, and then you need to make sure the reserve um ratio is what your customer asked. Um and also in terms of like minting and burning and burning, and also in the world of like cross-chain bridging, that is not something simple. Um and on top of that, it's like one of the reason people wanted to move the money movement on

chain is this 24/7 promise. But today we're still kind of held back by the real world bank. So how do you figure out the money movement at scale with 24/7 um schedule? It's still a challenge. Okay, next up we've got the classic, how do you bootstrap your liquidity so that you actually have deep liquidity to swap. I will just not talk length about this. I think a lot of people are talking about it already. Um and then off-ramping, that is like how do you build the um real world you can actually move money not just like within on chain between different chains, but in real world where you can actually spend it.

Which leads to our next thing about spend. Um once you have something like because stable coin at the end of the day, you make money to what? To spend money. So you need a a a a a vehicle to spend it. That's the card program or something similar to the card program where you can actually buy something in the real world. Okay, so now I'm going to just go into a little bit, we talk about the challenges, right? Um just talking a little bit of like using some of the on-chain data to see how early I I hesitate to say this. I feel like you're so tired hearing it, but we are really are early in terms of on-chain infrastructure to to to to to support all these things that are really hard about a stable coin.

So for example, honing in on reserves. Um out of the $315 billion of total supply, there's only 12.1 billion on-chain reserves corresponding. Now, I'm not saying that you have to have on-chain supply, totally not that you have to have the same chain on-chain supply for the reserve, but just like showing you less than 5% of the total supply has corresponding quote unquote like transparent reserves that you can see on chain. So this just show you how how early we are in this in this um minting of stable coin making stable coin success world.

Same thing, right? Um I think particularly me coming from like a Uniswap world, I'm pretty biased. Like I live and breathe breath in the um in the in the DEX data world. And it was I always knew that in general centralized liquidity has deeper deeper liquidity for you to swap, but it was very, very surprising for me to see that for example for USDT, less than like 0.5% of the supply of USDT is actually on chain indexes. Even USDC, I think it's a little better. It's like 1.32 percent. So DEX is just a sliver of the total supply of these this total stablecoin supply. So when you think about like things you want to do on chain right like swapping is the

backbone of what you can do in DeFi. So we are like super early in terms of the infrastructure. So with all this together, right? You have a proliferation. You want to crack okay, how do I make from like go from like step one of minting to step three of like okay, I made it as a stablecoin. I'm observing that the landscape has largely shifted from just thinking about how do I bootstrap my liquidity so liquidity first mental model of launching a token to demand first mental model of launching.

So what's I guess harder about this is we already talked about how much harder it is to just launch a stablecoin other than minting. But now you got to not only think think about all of this stack, right? You need to think about like how do you how do you mint? How do you reserve? How do you move the money? How do you spend the money? How do you hold the money? Like everything around it. On top of that, you're basically being asked to think about your distribution. How do I distribute my tokens to the hands of the holders? So that's like yet a very very difficult problem. So I would say that like when you think about the stablecoin proliferation market today, it's it's kind of an old word, but I think it's like very true. You're

thinking about like building an ecosystem. And then you really want someone to or you really want to not try to solve two problems at the same time. You don't want to just solve the infrastructure problem. Like I just said how do you create? How do you move? How do you hold? How do you spend the stablecoin? But you really want to kind of abstract away these complexities and basically get to iterate. Iterate on your own product. Iterate on how do you get that distribution to to your users? And not to say that underneath of all these complex functionalities that you need to crack, you have the KYC quite B compliance and like fraud because you know, you got to be careful with these stablecoins.

Okay, so we talked about a lot of words. Look at a lot of graphs. Um if we walk away with a few things today, these are the things I would like you to take away. So one we already know. We live in a proliferation stablecoin market landscape. And then in the same time, it is still incredibly early in terms of the infrastructure stack that can help you build towards stablecoin success. And everybody mostly everybody has realized it's not just like liquidity only or liquidity first. It's about creating the demand so that you set yourself up for success when you launch a token. But at the same time like because the infrastructure is so early, all these rails on like interoperability between different stablecoin token ecosystem,

how do you have a shared liquidity? How do you do on ramping off ramping 24/7? All these problems are still being solved. And then like the playbook of how do you launch like a demand for a successful stablecoin is still being solved. So we at Bridge here is very interested to solve this problem together with everybody. Okay, so that is the end. Thanks to the data partners at Elliptic, DeFi Llama, Dune, and RWA assets. Also the QR code is that um if you scan it and you can learn more about Bridge and then you can follow Bridge at stablecoin on Twitter.

Yes. What are the six things you said that was harder than minting was the spend and merchant acceptance rates? I'm wondering if you have data on that or looked at those trends. Unfortunately not. I wish I had a better answer. >> [laughter] >> Next time. Next time I will I will get back to you. Hi. What what would be the key factor for growing demand from Bridge perspective? I I don't know if I can like represent Bridge perspective, but from >> [laughter] >> from my own own perspective, I think it goes back to like use cases.

So why USDC USDT has like quote unquote cracked it, right? They had huge first mover advantage. So USDT Tether basically there's pent up demand from trading with like US dollars. So they had like huge flow in China trader and then they kind of just like they they knew what the use case is and they launched it and then they embraced it and they like were voila. I mean, they did a lot later like also with like the exchange integrations and they like all these corridors, but they basically embraced this use case. And then same thing for USDC.

If you look at the you know, the supply growth trajectory in DeFi summer, it really picked up. It's like there was a demand for a US like USD stablecoin to basically on chain like in DeFi summer to participate in all these like crazy activities. So I think it's just like okay, when you launch a token, it's not just like okay, I'm launching a token, but like there needs to be a usage for your token. So I guess thanks for the Bridge issued token. For example like on Fantom's cash, like they had a clear use case of like why they wanted to use it. And then so that's why they built all these like campaigns around it. They like did the DEX liquidity and then they moved on to lending. And then they wanted to like

you know, basically do better for their users. So so I think the success that we've seen so far is just like crack that use case. And I don't think it's something like people really solved it. So I think we're like actively trying to solve it together with our partners. Okay. Thanks. Hey. Um do you see a Do you see a future for decentralized stablecoins such as Bold?

Good question. One, I I think when I think about decentralized stablecoins, I definitely think there's a use case for it, but I don't think I'm like super qualified to to answer it because I day-to-day I just work in kind of like making compliant stablecoins, but I think there definitely should like it should exist out there because like we should have a diversity in different kinds of stablecoins. Anyone else?

Yes. I guess I'll just give you my [laughter] Um you mentioned that there was a surprisingly small amount of supply and on chain reserves. But what does an on chain reserve actually look like? Cuz this is just how does it count as a reserve if the reserve is just also in a stablecoin or is it that the reserve is in a different stablecoin than the one that's being issued? Yes. Yes. Yes. So on chain reserves, I'm mostly talking about like the on chain treasuries like superstate. So basically you tokenize the real world assets and then you put it on chain. I think it's really important because it's like you get into the whole like

ethos, right? Like you you want to make everything on chain. You want to make it transparent. So when you are trusting these like quarterly reports or like monthly reports again, then you kind of like we're kind of going backwards in the industry. So I definitely think there's a world where we can have like more on chain reserves like treasury reserves where we can share more transparently. Like people can just check. Basically there is you know, we say there's like a one-to-one reserve. So you can basically see like how how much like liquid reserve there is and how much like treasury reserve there is without like waiting for that like monthly report to be like you're fully collateralized.

Yeah. Cool. If nothing else, then thank you very much.