Stablecoins at Scale: Bridging DeFi and TradFi Markets - TOKEN2049 Dubai 2025

So to my left I have Paulo Arduino. Uh he's the CEO of Tether who that is the largest stablecoin issuer and he's the CTO of Bitfinex. You've probably heard of Tether at this point. If you're not, you're probably in the wrong room. Um after Paulo, we have Guy.

Guy is the founder and CEO of Athena Labs. uh they are a decentralized stable coin that is powered by eat staking and derivatives. And then finally we have my favorite crypto investor uh over there. Uh we have Rob Hadock. He's a a general partner at Dragonfly that is the second best crypto fund uh and a former Goldman Sachs and Gold Tree investor.

So Rob Paulo guy thank you uh for coming. Thank you for having us. Yeah. So first let's talk about this. You have said a statement Paulo which I think is really interesting which is fiat currencies are memecoins with extra steps.

So let's uh let's cover this first. Well the problem with fiat currency is that you know they are made by by humans right. So and um every few years human change um in the central banks and they take different decisions and as memecoins they are very unpredictable. Okay there we have it. It's a it's a spicy take to start the panel with.

Hopefully we'll have many more here that are quotable um that you can quote and attribute to us. This is not Shadam's house rules. This is the exact opposite. I think you get extra credit for tweeting out everything that we say. So let me start with stable coins.

I think one of the things that is the most interesting to note about stable coins is that there's been I think it's fair to say two major disruptions in the last 50 years in the payments um systems. One of them was the card networks of course the Visas, the Mastercards that transformed consumer payments. The second one was really the rise of these fintexs, these addins, PayPal, um, Square, Stripes, and stable coins really are now positioned to be this third major shift. So, they're making global payments instant and programmable. So, that's extremely exciting.

That is the summary, that is the context that brings us here today. Um, stable coins are no longer crypto thing. So, I'm I'm going to start with the state of stable coin adoptions and where are we now? So, Paulo, let's go to you again. big surge of issuance over the past 12 months in volumes.

I want to ask you explicitly where we're seeing realw world uptake instead of just trading volumes which is how obviously stablecoin started and then maybe if you can distinguish a little bit between what's the use case for B2B and what's the use case for BTC right so when Ted was born in 2014 of course the main use case was um cryptocurrency trading from 2014 to 2020 that is when 100% of the usage of stable coins and mainly USDT was for cryptocurrency trading settlement and and and so In 2020 something happened that was the pandemic and so uh something very interesting um um happened. So in the merchant markets developing countries those are the countries where you have the lowest um average age um and um so having the lowest average age you find kids that were from 2017 to 2020 very interested in the cryptocurrency market. In 2020, the pandemic hit and uh the jobs uh started to fail. Uh you had national currencies that started to devaluate faster against the US dollar like Turkish, the Argentina pes and so on. So you had kids at home looking at the parents going out in the streets with COVID trying to buy cash bills, cash dollars.

And so it's actually for the first time the kids were looking at the parents asking the parents why the hell you are going out putting yourself at risk and to just to buy dollars. I have dollars on my smartphone. They're are digital. I can send it to my friends in a second. And that is actually how it bootstrapped the use usage of USDT across hundreds of millions of people.

It's a word of mouth is kids teaching to their parents. As of today, we have around 37% of the users of USDT using USDT as savings. Right? So those are all the unbanked people that don't have access to nice savings accounts that gives them yield like buying treasury in themsel treasuries theel themselves and so on. Right?

So 37% is already savings. Then you have another 30% today that is payments and crossber payments remittances you name it. And then the rest is still related to cryptocurrency trading. And so that's the consumer side um of stable coins. Real quick, you know, on the institutional side, what is kind of like the clear advantage?

I think that the next leg up for USDT to get from 148 billion um today to 1 trillion will be trade finance. What we are seeing is an huge adoption of uh USDT um aim trade finance for commodity trading um you know buying and selling goods from um from um uh Asia to central South America. We are seeing that growing. Teter invested recently into this company called Adeo Aagro that is a public listed company in the US. They are selling they are producing rice and um uh milk and um and bioeththanol and all that and they're actually starting to look into how USDT can can be used as a as a payment system internationally but we we ourselves we have put a lot of capital to support uh the usage of USDT for crossber payments also when it comes to um commodities trading we announced in October 2024 the usage the huge deal for uh $45 million for oil trading with Middle East.

Um and uh that is just going to grow is is bringing additional institutional adoption. Uh we have been talking to the biggest commodity traders in the world and they have the problem of sending a wire takes sometimes from 5 days to two weeks and imagine having a ship waiting to load barrels of oil but cannot load a barrels of oil until the payments is done. With with stable coins, you get the payment done in 20 seconds. Right? So that is a huge value proposition.

It will optimize the commodity trading jobs will make uh additional yield and returns for the commodity trading firm. So that is a gamecher. So let's jump to Guy. Guy, you are the founder of a decentralized stable coin. I'm very curious about are they serving different market than centralized um stable coins and are there particular use cases in which uh a centralized stable coin isn't a perfect substitute of a decentralized one?

Yeah, I think there's uh some crossover in usage, but then also very distinct user bases who are finding Athena's product useful versus versus a Tether. I think the four broad categories that we think about use cases at the moment are trading collateral on centralized exchanges, uh savings products that sit within DeFi, payments, um and then uh and then uh you know broad usage uh uh for remisses as well. Um I think the use case that we found Athena has actually had uh the most pickup is actually thinking about trading collateral uh across DeFi and CFI. Uh so basically being able to use your collateral while it's earning a yield in some format is actually pretty useful in some contexts for trading firms. Um and then when you're using it in DeFi obviously being able to securitize the yield slice and dice it in different ways is a is a useful product within those financial applications.

Uh so I do think it's a slightly different user base where I think you know Palo found the most success uh originally uh in developing countries you know savings technology for for those groups of individuals. I think ours is for slightly more sophisticated financial user base. Yeah. So is USD a competitor to tether? What are you are you enemies?

Are you frenemies? Are you friends? Uh no it's actually quite the opposite and I put out a tweet around this uh last week. So I think um one thing that people don't realize about Athena and Tether is that actually Athena is actually quite helpful to the growth of Tether in general. So um uh because most of the perpetual swap market is denominated in Tether.

We for every short that that Athena puts into the market, there needs to be a long of tether that sits on the other side. So the growth of Athena actually you can think about it as a dollar increase in uh in USD actually creates around 70 cents of increase in Tether on the other side. Um so it's a pretty um beneficial I think growth on on both sides in terms of how we we benefit one another and I think during periods in the last year Athena is probably a top five holder of of Tether within within the world. So uh definitely not competitors I find uh different use cases different user bases and then I think the growth sort of benefit each other. So what you're saying is that um Athena is pumping uh USDT's bags and so it's in some senses.

Yes. Good. It's good. That's another quotable moment right there. Um Rob, let's go to you.

So we have issuers, we have the routers, we have messaging layers, we have we have basically everything. We have stablecoin specific L1's. What is missing? Why is this so small? I mean, it really depends on like what use case we're talking about, right?

And so Paulo earlier talked about, okay, well, you know, I think you said 37% of people are using USDT for savings, right? The if people are going to keep that USDT and that's going to grow as part of their savings, they also need usability, right? So, you know, we're talking about there's now card issuance that exists in the space. Okay, well maybe I can pay a bill or I can do something like that. That's at the early stages, but that's starting to to pick up a little bit.

But when we talk about okay, well, what is the really big market? It's crossber B2B primarily crossber payments market. It's a $200 trillion a year volume market. Like that is I think what people are really playing for in my mind. I don't know PA might disagree in and others but that's where you say okay well like we're taking over the banks because that's a place where the banks haven't really done a good job and they've kind of underserved like trade finance and others and what do I need to do more volume in that space well I need better uh I need things like better reconciliation I need better compliance I need fraud uh you know I be be able to understand if I have like you know I can't necessarily have atomic settlement I need to be able to have a period of time where I can have a chargeback or something like that I need to be able to understand if the shipment is actually going to reach me and is there going to be escrow etc.

And there's not really the right setup yet in most cases for there to be for businesses and the people who sit on the side of those businesses, the PSPs, the banks, etc. to feel comfortable doing lots of volume in stable coins at that cross border. That's starting to pick up, but it's it's early days. So coming back to you Paulo, one thing that I'm super curious about is I'm running the country of Angola and instead of Quanza, what's happening is my citizens are now using stable coins on these self-custody wallets and the economy is actually starting to move in stable coins. So I the question is is there a ceiling to stable coin issuance and adoption?

And another related one is when do regulators push back? Well, um this is a very good question, right? So I was I will not disclose the name of the minister of finance but I one year ago I was working in the office of um a minister of finance and uh I was afraid that he was going to ask me well you know why my people are converting my national currency into USDT. So I I thought it was going to be an adversarial conversation but the reality is that one side you can expect people moving from the um national currency of a country to uh for example USDT. On the other side though uh USDT is enable enabling so much more remittancies in this moment that is actually is balancing that out and actually is helping the economy to drive faster.

Right? So that is a gamecher. um uh we had examples with certain countries that got more than 7 billion in a year of volume in terms of remittances coming from for example US and Europe into that country and given the fact that u for the average emerging market uh 20% of the GDP is remittances up to 80% in certain cases but on average 20% of the GDP of a country is remittances the fact that you are optimizing the flow of remittances reducing by 10% uh the the cost of moving funds right so um we know monogram and others are charging you know six from six to 20% um in fees to move money in globally if you remove all that you know you are leaving money in the pockets of the hard workers that are working abroad from abroad from their families and they're every month they're are sending money back home so that is a huge feature that stable coins and USDT are enabling for these countries that's why we are not seeing push back actually we're seeing excitement. We are seeing adoption and embracement from the country itself. So also they know that the majority of the goods that are importing from from foreign countries is still trading in US dollars.

So we are making the their ability to import goods much uh better um on international level. So I think is with proper education uh this uh these issues are being solved and so I hence I don't think there is any ceiling in in the adoption of stable coins and the growth of stable coins in the next few years. So guy, Tether is essentially a very narrow bank where every IOU that is issued on chain has a backing of either a T bill, a treasury or an actual dollar in a bank account. However, USC is something very different. It is a way weirder form of stable coin.

One of the things that we talked about was that institutional adoption is one of the things that's going to drive us forward. So are institutions comfortable with holding um stable coin whose stability comes from ETH staking the basis trades and delta nut strategies? How do you think about institutional adoption for USD and Athena? Yeah, I think it's just presented slightly differently rather than something that's used for payments or like the normal way that people think about stable coins. I think uh USD as a product is something of a weird blend between a structured product or investment vehicle and a stable coin kind of all blended into one.

And I think the presentation to tradi or those pools of capital is that there is just an interesting risk adjusted return that you can capture within the basis within crypto markets. So in 2024 you roughly annualized around 18% for the yield that was actually generated in the backing for USD and it's so the presentation to them is more around here's an interesting dollar based return product that you can actually capture from crypto rather than something that's actually presented as a as a stable coin to them. Um, and also the cash and carry, you know, it's something that people have been doing in Tradite for the last 50 years. It's not something that's sort of like new or innovative from crypto. Um, so they understand the risk profile and I think when you present it as an investment, uh, yeah, it's a very different way of of looking at it.

Rob, you've invested in Athena. So right now there's nobody else in the room. It's just the two of us s side by side. My question to you is, is project really decentralized? Is USD really decentralized?

If they're holding all the collateral and all the pers on all these centralized exchanges, is this really a decentralized thing? It's just the two of us. No, I mean, listen, the reality is is there is still decentralized governance, right? And like that's what actually matters. Like an ability to affect the way that a protocol is going to run, right?

And like you can go on to, you know, the forums today, you can go on and you can propose something, people can vote on it if you're holder of ENA. So that's what really matters. But I think if you maybe take a step back and not make it about Athena, but you make it about like what happens in crypto more broadly, like there is this natural tension sometimes that we are continuing to see and we're seeing it a lot of these projects that call themselves stable coins between like okay well am I going to offer like a novel new innovation or am I going to you know uh be completely decentralized and a lot of us who got into the space a long time ago you know was very ideological about what you know decentralization is supposed to look like. as we've, you know, innovated, as we've made it more mainstream, as we've brought more people into this market, like the reality is is innovation wins. Being able to go and, you know, uh have real business development and be able to interface with customers, that wins.

And if that is a uh a problem for you or you think that's not decentralized enough, well, your project is probably going to die because the consumers don't give a That's funny. That's not how he usually talks to me when we're oneonone. So, uh Okay. Uh, one of the things that I think is very interesting right now is very rough model, but there's a pyramid of value capture right now in stable coins. At the bottommost layer with one of the best businesses of all time sits tether um, an extremely profitable company that I'm extremely jealous of and that's the bottom of the pyramid are the issuers.

On top of that, we have these routers and these basically intermediaries that allow you to generate these wallets and send payments all around and stable coins. And then at the top we have the money apps and the people that actually are building applications on top of this. Right now it is a pyramid but eventually to me it seems very natural that the pyramid has to invert. The value capture has to invert towards the applications at the top making the most money then the people with value added service providers and vasts and then at some point the issuers can't be just rolling in cash and having just fantastic businesses. So let me start with you Paulo.

Is this how you see the world? Is the status quo possible to maintain for longer? Is the gravy train gonna continue going forever? Very good question. So um what Tedar is doing uh with the profits that we generated, we generated around $20 billion in the last two years and a half in profits.

Um less than 5% were distributed to shareholders. The rest is actually being used to build the biggest distribution network uh that humanity ever seen. We are building uh by 2030 hundreds of thousands of kiosks in Africa with solar panels on top and and you know selling subscriptions for for uh rechargeable batteries. We are uh we both and we are in the progress of acquiring more bodeas uh chains in central South America. So I agree with you that if you are a stable coin and you are just hoping for the status quo, you are you have a bad luck.

But for example, we invested in Rumble. We're investing in in we have a huge portfolio of companies that are doing things one crazier than the other that will allow us to continue to build in the most distributed diverse point of point of view. Again, the biggest distribution network in the world. We have millions of physical touch points on earth. If you go in many cities, you are going to see our logo.

You know, it's not necessarily us we put it there, right? There are like we have so many partners. the actual value proposition and you know the many people ask me well why tether is not giving back the yield right so um the point is the answer is that you shouldn't look this at stable coins from the American perspective right so um if um if you are a US person you can have your bank account and you have you put your money in US treasuries yourself you you look at that or you think why the hell I should use that if it's not giving me the same returns of of my T bills But put yourself in the shoes of a person living in a country where the intraday volatility of the national currency against the US dollar is more than 4%. That is the yield that you could give them on a yearly basis. Of course, the two things don't are not adding up right.

So what we are telling the people living in in emerging markets where they have super high inflation like 50% year-over-year in in in Turkey is that we are taking that 4% but you are using it to build infrastructure to make the distribution networks much better to give them more services and to make the system much more resilient. a small company like Tedar because we have 150 people inside was able to move the needle of financial inclusion at the rate of 420 million users as of today in the emerging markets when NOS's and charities that got so much money over the last 50 years they didn't move anything they didn't do anything when we go in in the smallest v villages in Africa or in central South America they are not there we are there and so we are changing the the the the society in that way and we can do it because We keep the yield but we are not puketing. We are not buying yachts for us. We are just reinvesting good companies. Even though you Thank you.

Yachts does sound nice though. Let me just say that. Go ahead. Guy. I was going to add I think um a lot of people overindex on the success that they've seen of Tether as one of the best business models ever.

But actually all of the other stable coins that exist and all the new ones that will come to market, I don't actually think are anywhere near the best business models that exist. they're actually pretty average business models and the reason for that is that every marginal new entry into the system only really has one axis that they can actually compete with tether on and that's sharing more of the yield with distribution partners on the other side. So I think obviously tether captures a lot of value where they sit in that pyramid that you were describing but if you look even at like the circle financials that were coming out around the IPO or other you know uh new entrance that have come to the market it's actually kind of distribution platforms or centralized exchanges which almost capture more of the economics of the products for everyone else except for tether um so I think we have made a bit of a mistake sort of overindexing on the success that they've had and uh it's not necessarily the case going forward that um you know issuers outside of tether actually capture much value Maybe um maybe I'll push back a little bit u because I think someone has to fest investor. You love listen I I think the reality is is like everything Po said is true and that's been true to date. Uh we're we're going to go from $230 billion to hopefully trillions of dollars of stable coins outstanding.

We're it's not going to be the same as it is now. It is going to change. And when you talk about the you know people that pow serving in Africa like obviously they do not care about that force percent. When we're talking about serving the institutional use cases that 10x 100x this market, they care about that extra BIP. When I go from one BIP to two BIPs, that's 100% difference.

That's not just one BIP, right? And they're going to have a lot of heartache around sharing a bunch of economics or not getting a share of the economics if they're going to be using that stable coin. So, we're seeing this conversation, you know, in many many parts of the world. I understand that that's not what the consumer in Africa cares about. But when I think about what does the future behold versus like what is happening right now, I think it is almost undoubtedly true that the vast majority of stable coins are and stable coin issuers are going to have to share economics.

My guess is that for USDT to hold the current market share that they have, which is astronomical, they're going to have to share economics because the rest of the market will grow without it. And so I think it's it's one thing to talk about where we are today, but it's another thing to think about, okay, well, like this market is going to get so much bigger and how does that have to change? And stable coins, the reality is is in payments there's a there's an acquirer and there's an issuer. Now they're they're collapsing, right? And stable coins allow you to do that.

You can be the issuer or something and then you can monetize as the acquirer or the person that helps the merchant accept, right? And Po was talking about this a little bit like he builds this merchant uh network and he takes that 4%. Well, what's probably going to happen for most of these people is they're they're going to give the issuing economics away and they're going to want to uh monetize the acquiring economics, which you're kind of doing the opposite, at least you talked about, but because that's what like the public markets care about in the US. That's how you get a higher multiple. That's what investors care about.

And so there's kind of an incentive misalignment for the current model and if we're going to grow into a more institutional, much larger model. So let's continue on that thread. 3 to 5 years from now, who are the winners? are the fintexs, the banks, the cryptonatives, the current incumbents. Who wins in this market?

I think for the use cases that we're talking about, the banks are to be honest. Like they already do not serve like crossber use cases well. They already do not serve people in emerging markets well. They the correspondent banking system is like a complete, you know, it was good for what it was. It's complete failure today.

We're seeing the rise of alternative payment networks absolutely dominate uh and and grow much quicker than the rest of the market. When you look at wise, you look at, you know, these types of non-stable coin payment networks. And so I expect that um you know the fintex and the crypto platforms will just be the same thing like we will stop talking about a crypto platform and a fintech as a different thing because all of the fintexs will have stable coins and they will all use them and like that is coming much quicker than I think any of us realize and so you know we'll leave the banks behind and you know good riddens. In the back room we were talking in confidence just you and I uh and you told me that you thought that uh circle's newlyannounced circle payment network was going to absolutely fail I think was the actual those are my exact words. So tell us why the CPN will fail.

I I think there is the CPN's very ambitious and I think there is a uh a world in which it works which is that I go and I offer a um you know a value added service that the top level I offer software I offer compliance I offer um reconciliation you know fraud etc and then I bring everybody into that as a kind of a software platform. The problem you have right now with the way the current model looks or any sort of API aggregator, aggregator of ramps look is that you end up competing with your end customers. And so the incentive is for their current partners, call it like a BVNK, is to not actually want to send their flow through the CPN because now all of a sudden that flow is more expensive. They need to pass on that cost and they're less competitive. And so they might use it for certain things, but the incentive over time is to bypass anything that eats into their economics, which kind of gets back to the point we were just talking about.

It's all it's all incentives. It's all economics. And these things are going to get whittleled down as as far as they can for what the competitive dynamics and what type of value that you offer. And Paulo, I have this pet theory to myself that one of the things that has made stable coins so unique and so attractive is if you were fintech before stable coins, you had to go to 150 countries, get the local regs, get the local integrations, do reconciliation, integrate with all the local players. And right now what we have is we've sort of inverted the model by having the shelling point being stable coins.

150 countries are solving this problem for me and the only thing that I have to integrate with is the stable coin as the shelling point as integration point. So following that train of thought, I sort of get to myself, maybe for the first time ever, we get to see the first truly global fintech. Do you see it this way? Because right now, Revolute is not truly global. PayPal is not truly global.

These all have their dominant markets. Can we see the first truly global fintech built on Tether? I think that is quite interesting. I have this theory where we talked a lot about the globalization, but the world is going back towards localization, right? each economy, at least in my opinion, is looking much more inwards rather than um outwards.

But money is the thing that will unify them all. And so that's why stable coins are going to be very important to unify all these economies. Although every country will start to protect more and more inwards, we we start to see that with tariffs, right, in these days, right? So everyone is much is paying much more attention to exports and imports. they want to they have now much more incentives to strengthen the the local domestic markets and also looking at their neighbors rather than thinking that they can ship anywhere and they can you know and everything will necessarily global by default.

So I think we were going to go towards localization but globalization when it comes to money also global FX markets are going to be something very very important. Um I think that well recently we also issued um and we announced the first attestation of Tedar gold that is our gold back stable coin. I believe that that is going to be one of the key stable coins for the future. That is very interesting because there is no way to make money out of it. So we created a product that if extremely successful could cannibalize the the revenues of any dollar-based stable coin because basically there is no way to make money out of a pile of gold sitting in a vault.

But we did it because it's the right thing to do. You I want to have gold onchain. I want to have every single national currency be tokenized so that people can choose very quickly. They can move money. They can move value in a very transparent way.

Of course, you can add ZK layers and have privacy on top of it. Uh, but it's very important that all the the the transaction of value will move on chain, but while allowing countries to look more at themselves and protect their markets because that is going to be the future. Okay. So, I have two questions for quickfire and out of all of you, I'm going to start with Rob. I only want numbers, no justification for this.

So, the question is, it's five years from now. Rob, how many stable coins do we have with over $1 billion of issuance and how many do we have with over 10 billion dollars of issuance? I think so there's six uh that have over a billion today I believe and two that have over 10 billion if we don't include like BL and like all these other things. My guess is that number is significantly higher. I would say 50 uh over a billion and like call it you know an order of magnitude that's similar 10 that is over over 10 billion guy pretty similar I think around 20 to 30 over a bill and then 10 over 10 bill I would I would have said 50 over 1 billion and um around 20 over 10 billion and probably only five of 100 billion that's a lot of stable coins okay second question for all of you Rob it's 5 years from now how many blockchains have over 1 billion of stables issued on them in about how about 10 billion.

All right. All right. So, same thing. There's nine, I believe, today. Maybe it depend.

I think Talon is close and a couple others close. So, maybe 11. Um, I think that goes to like 30. There's not like blockchains are just there's going to be more of them. Like there's that's the incentives.

Um, over 10. Uh, I think there's only two today. Uh, maybe maybe more. Um, I think like Yeah, like probably 8 to 10 again. Yeah, I think over 30 for for a billion and then four to five probably for 10.

Yeah, pretty much the same numbers. Gotcha. And how about um stable coins over a hundred billion? Right now there's one. Are there going to be more than one in five years?

Uh I mean if JP Morgan would put 101 billion into a stable coin, that would be very easy for them. The problem is the distribution network. The thing is that among our 420 million customers or users in emerging markets, I'm pretty sure that JP Morgan would not touch them with a 10-ft pole because they are too poor of being of their interest. That is a spicy take. And with that, that's the end of our panel.

Thank you everyone. Let's thank the speakers.