The Case for Ethereum: Stablecoins and Beyond | Maria Shen - Electric Capital

the mic working perfect. Hi everyone. Thank you so much for being here and for having me. My name is Maria. I'm one of the general partners at Electric Capital.

Electric Capital is an early stage um investment firm. We've been around since 2018. And one of the things that we really strongly believe in is that in the long term people undervalue things. Um and so what I'm here today is to walk through how uh I and Sanjay on our team think about Ethereum. And of course, what better place to do it than at ETH Denver.

So, we'll start off with there's a lot of stories, especially at the end of last year around dd dollararization, around this idea that countries want to reduce their dependence on the US dollar, but actually the the real trend that we're seeing is global demand for dollars. um that we're really at this time witnessing the largest expansion of the dollar's network effects in decades. And Ethereum is uniquely positioned to host the global financial infrastructure for this new digital dollar economy. And ETH stands to benefit directly from this growth. Why do we say that?

What does that mean? Let's walk through it. First, millions of people are currently becoming new dollar holders through stable coins. This is because individuals want US dollars for security. Over 4 billion people face significant currency risks.

21% of the world's population live in countries with annual inflation above 6%. This erodess their savings. This erodess their purchasing power. And for these populations, holding dollars, holding USC means financial security. It's a store of value.

It's a means to transact cross border. It's a hedge against local currency volatility. But it's not just individuals who want dollars. Businesses also want to transact in dollars. Dollars are the dominant currency for global trade.

88% of all global FX transactions involve USD on at least one side. Businesses in emerging economies need dollar liquidity for international payments. Ummemes and freelancers around the world want dollars to be paid and avoid currency risks. And with this huge global demand for dollars, for the first time, anyone can actually hold dollars. This was not true before, but it is true now.

Anyone with internet access can hold and transact in dollars without a bank, with no government permission, and with 247 global availability. So, I think it's not a shocker then that stable coins since 2020 have grown more than 60x. And the countries with the highest level of crypto adoption outside of the US, number one is India. Um, and we see emerging economies like Vietnam, like Nigeria, all ranking within the top 10 countries with crypto adoption. So what do these stable coin holders now they're holding US dollars, they're not just going to passively hold it and watch their savings erode away.

They want to put their money to work. So these millions of new people who are holding dollars want to earn yield. They want to invest. Ultimately they want to grow their wealth. Unfortunately they can't turn to traditional finance because they can't very easily participate in the US banking system.

Crossber financial services are expensive and slow and uh often geographically restricted. Traditional finance that does work internationally is usually built for institutions and high- netw worth individuals and not for global retail and geographic and regulatory barriers really prevent billions of people from participating in a US dollar denominated financial system. So all this means is that there's this increasing demand for new financial infrastructure that can serve billions of people globally. So what does this infrastructure need? What does this new financial infrastructure look like?

First of all, it has to be globally accessible. It must work with anyone with internet access from New York to Nigeria to rural Nepal. It has to be safe for institutions. It must provide the security, the reliability, and the regulatory clarity as well as the customization that institutions need to bring the billions that they have on chain. And lastly, it needs to be resistant to government interference.

It must operate without the control of any single government because governments will naturally be uh prone to restricting things that perhaps um lower the barriers of USD coming into their own countries. Ethereum delivers on all three requirements. What do we mean by that? First of all, Ethereum is globally accessible. It's available 247 to anyone with internet connection worldwide.

It's also safe for institutions. Um, it has the most economic security and that comes from decentralization. I think often when we say decentralization, it it we kind of detach it from the value that it has. But the value here is that it is secure that you can put billions on chain or you can put your whole life savings on chain and trust that it will stay there that it can't be frozen or taken away from you. It's reliable.

For over 10 years, it been running with 100% uptime past market crashes, crazy geopolitical events. It's regulatory compliant, so ETH is classified, of course, as a commodity by US regulators. It's customizable. The fact that there is an L1 plus L2 framework means that institutions are willing to work on top of Ethereum. Of course, we see that with Bass and Coinbase.

We're seeing that with Robin Hood, which launched their L2 uh test net recently. and it has a proven test track record. It already hosts the world's largest digital economy. Um, over 160 billion stable coins on chain, over 80 billion on D5 protocols, over 14 billion in real world assets. And lastly, resistant to government interference.

This is incredibly important um because it's nearly impossible to replicate this feature today in any new emerging L1 chain. It has a million validators across 80 more than 80 countries. There are multiple independent developer teams um ensuring resilience and building clients. It has the largest open-source developer ecosystem in crypto. And because of the way that it started, it has broad asset ownership.

And all of this is wrapped in a culture that has consistently over time prioritized decentralization at perhaps the cost of other things. And it's really difficult to retrofit that kind of culture back into a new layer 1 now. And so when we look across the board at what kind of system could actually serve global uh stable coin holders um from layer 1's to traditional banking to uh perhaps corporate platforms, it seems pretty clear that Ethereum is the only one that can fulfill all three requirements. I did add a small note here that um Bitcoin of course has a lot of these properties, but it's unfortunately not very programmable right now. It could become more programmable in the future should OPCAP pass, but demand for ETH will likely increase as Ethereum itself becomes um this new financial layer.

And so what do we mean when we say that ETH can become the global reserve asset? First of all, what is a reserve asset? A reserve asset is something like US dollars, US treasuries, it's gold. It's something that underpins everything else in a financial layer. And usually it holds that spot because it can um it's highly liquid.

It's trusted. It's used to back loans. It's used to settle transactions. And of course, we see that across US dollars, US treasuries, and gold as examples in our current system. But why can East be a reserve asset?

It's because as billions of dollars flow through um flow through stable coins on Ethereum, participants need a secure, permissionless, and productive asset to back the lending, borrowing, staking, yield generation that is happening on chain. And ETH is uniquely suited for this. First of all, it's scarce and trusted. ETH supply is predictable with low inflation and no central control. it's productive.

So unlike gold or static dollars, ETH can actually generate yield through staking. So this is very similar to um real estate or perhaps how treasuries generate income while being held. It has collateral utility. Um ETH is already one of the largest onchain collateral assets in the Ethereum ecosystem. This was back uh this $19 billion is back in uh from back in July 2025.

So may not need need to be updated but as of July 2025 it was 19 billion in lending protocols and instit institutions need to hold it if they want to access D5 markets. It's resistant to uh being seized by governments. It cannot be frozen and so it is more resilient than actually centrally issued assets. And lastly it's programmable and liquid. It's deeply integrated into um every single D5 protocol uh on chain especially on Ethereum and has um unmatched liquidity for large transactions.

So this makes ETH incredibly valuable. ETH the asset and we believe that demand for ETH naturally grows as the system growth. ETH earns yield, secures the network and underpins defi lending. So, as there's more stable coin adoption, there's more onchain activity as stable coin holders want to put their money to work, there is more need for ETH as collateral underpinning this financial system. Um, which leads to more ETH held by institutions and users.

And L2s play a big role in this as well. They we believe that they expand the demand for ETH with cheaper transactions and faster execution. It means it increases the surface area um that ETH can be used as collateral. So as demand for ETH increases, it's also positioned to become a global store of value and ultimately we do look at ETH as a prospective store of value. Um if you look at the properties of store of value assets needs to be portable, divisible, durable, scarce.

Um, it can't be frozen, can't be seized, it's programmable. Um, ETH fulfills all these things. Bitcoin fulfills most of these things. But the thing that ETH does a little bit better that's very interesting is that it generates yield. And we think yield generation is a major unlock.

Um, investors usually overwhelmingly prefer yield generating assets. So, US households hold much more in dividend paying stocks than they do in gold, for example. And this growth of the stable coin economy on top of Ethereum sets up a very powerful flywheel for both Ethereum and for ETH. So as more stable coins are put to work on on Ethereum, there's greater use of ETH as collateral um which increases demand for ETH and as a result the security of Ethereum itself strengthens which prompts more institutions and more people to build on ETH and to put their assets on Ethereum which leads to growing demand for stable coins. And it's incredibly difficult for traditional finance or or other systems to be able to replicate a flywheel like this.

So in conclusion, um what what I and and and Sanjay on our team feel very strongly about is that holding ETH is likely the simplest and most effective way to gain exposure to this growing stable coin economy. Some disclaimers to end. This represents my views personally and not those of electric capital. But thank you so much for the time. I really appreciate it.