This special bonus episode of The Scoop was recorded live at the Crypto Bahamas conference with Jeremy Allaire, CEO of Circle, the digital payments and infrastructure company behind the popular stablecoin USDC.
As data from The Block shows, USDC is the second-largest stablecoin by market capitalization, and its share of the total stablecoin supply has been steadily on the rise.
According to Allaire, a primary driver of demand for stablecoins comes from crypto native businesses:
“Basically any business that operates in the crypto economy wants to use stablecoins as working capital. Well, these are businesses that also have borrowing needs, these are businesses that want to borrow, and so you want to borrow stablecoins — so there's inherent demand to borrow in that medium of exchange.”
It is this demand for stablecoins that creates lucrative yield opportunities for stablecoin lenders in crypto, in the same way that lenders in the world of traditional finance profit from the interest on the money they lend.
As Allaire explains, stablecoin borrowers are willing to pay to borrow capital:
“Banks get 17 or 20% from consumers for lending the money for credit cards, right? So people pay an interest rate to borrow. Working capital of crypto is stablecoins, there's businesses that want to borrow it, and there you go.”
During this bonus episode, Chaparro and Allaire also discuss:
- Yield bearing products and US securities law
- “Centralized” vs decentralized stablecoins
- The future of stablecoins