🔎A big win for stablecoins
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In today’s newsletter:
🔎A big win for stablecoins
📊 On-chain alpha
😂 Crypto meme of the week
🗞️ The latest DeFi news
🔎A big win for stablecoins
U.S. Senate just officially advanced the GENIUS Bill.
In case you’re not familiar with it, GENIUS is a major bill focused on regulating the stablecoin sector.
It’s true that so far, most crypto regulations actually hindered innovation.
But the GENIUS bill is actually a big deal for several reasons:
Many crypto advocates directly contributed to it with suggestions & feedback - Sam, the founder of Frax Finance, a stablecoin protocol, is one of them
GENIUS not only regulates stablecoins, but also legitimizes them - By setting clear rules, institutions will now be able to launch their own stablecoins more easily
It introduces annual audit requirements for stablecoin issuers with market caps over $50 billion to make sure stablecoins are actually fully collateralized
Stablecoins have already found strong product-market fit, and this bill will likely significantly accelerate their adoption.
Several multi-trillion-dollar institutions like Fidelity have already signaled their intention to release their own stablecoins.
Unfortunately, there are also some downsides.
In order to appease the bank lobby, the GENIUS bill says that ”stablecoins can’t pay interest or yield to holders”.
This essentially means that stablecoin issuers will keep all the profits that they generate from US Treasury funds or other yield sources for themselves.
Tether (the USDT issuer) and Circle have already been doing that for years.
Last year, Tether alone made $13 billion in revenue!
But there are now also many popular yield-bearing stablecoins that are generating yield for their holders, such as the ones created by Ethena and Resolv.
According to the GENIUS Act, it seems like those stablecoin issuers will no longer be legally able to pay interest to the US citizens who hold their stablecoins.
Obviously, this doesn’t mean that yield-bearing stablecoins will cease to exist.
But it might make it harder for US citizens to access them. Yet in case you’re living outside the US, you will most likely not be affected.
Before I cover a few ways you can benefit from the upcoming surge in stablecoin adoption, here’s an overview of Lista DAO:
Together with Lista DAO
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Lista DAO is offering ultra-low borrowing rates — with 3 core vaults: USDT, USD1, and BNB, APR as low as 0.03%, with most under 3%!
Here’s how you can put it to work 👇
1️⃣ Got USD1 but want exposure to BNB? Borrow BNB on Lista and farm Launchpool or Megadrop — earn yield while keeping your USD1.
2️⃣ Need BNB to join Binance Alpha or ecosystem campaigns? No need to sell. Just collateralize your USD1 or USDT, borrow BNB at low cost, and run hedged strategies.
3️⃣ Holding ETH or BTCB and want to boost returns? Use them as collateral on Lista, borrow USD1, and deploy in stablecoin strategies — maximize capital efficiency.
Why use Lista Lending?
Permissionless P2P lending
Dynamic interest rates via multi-oracle feeds
Full support for advanced strategies like this one
Enhanced risk control measures such as isolated market risk
If you're sitting on idle BNB, this is your chance to put it to work.
How to benefit from the upcoming surge in stablecoin adoption?
In my opinion, there are 2 main ways.
The first way is to invest in protocols that benefit from increased stablecoin adoption.
A few clear winners that I expect to capitalize on this are AAVE, the largest liquidity protocol, and Pendle, the largest yield trading protocol.
Both protocols have billions of dollars in TVL. And a very large percentage of their TVL is in stablecoins.
As the total stablecoin market cap increases, these two protocols will likely also see a massive surge in TVL.
Now, don’t expect the stablecoin market cap to double overnight due to the US’s GENIUS Bill. But the stablecoin sector will certainly grow exponentially over the coming years.
The 2nd way is to bet on the tokens of the actual stablecoin issuers.
Unfortunately, it looks like yield-bearing stablecoin issuers won’t benefit from the GENIUS Act. But one potential gainer might be Frax.
According to Sam Kazemian, the founder of Frax Finance (who also contributed to the GENIUS act), Frax might become the first licensed legal tender stablecoin protocol under the new stablecoin regulations.
This could potentially lead to major institutions starting to use Frax’s stablecoin product in the coming months, as institutions are looking to use regulated products.
Kyle wrote a great post on the bull thesis for Frax Finance:
Overall, I’d say that the GENIUS bill is bullish for DeFi.
It will certainly lead to massive institutional inflows into crypto, as institutions have been waiting for clear regulations for years.
It remains to be seen how it’s going to impact yield-bearing stablecoins in the long run, but I’m confident that those will continue to exist and thrive.
It’s becoming obvious, though, that the macro conditions are aligning for a massive stablecoin boom, and DeFi is perfectly positioned to benefit.
On-chain Alpha🔎
Aave now holds 20% of all DeFi TVL
Crypto Meme😂
The latest developments in DeFi
Rabby Wallet and Debank integrated Hyperliquid’s HyperEVM L1
Solana development firm called Anza introduced a new Solana Consensus Mechanism that will reduce transaction finality by 100 times
Chintai announced the launch of Kin Capital’s $100M tokenized real estate fund - offering 15% targeted yield backed by real-world assets. $CHEX stakers will earn a % of Chintai’s revenue
INFINIT launched an AI-powered upgrade to its app, enabling a personalized and adaptive DeFi experience for both discovery and on-chain execution
Chainlink’s Cross-Chain Interopability Protocol (CCIP) went live on Solana
Soul Labs, a unified omnichain liquidity layer, launched a public sale for its token SO. The revenue of the protocol will be used to buy back SO tokens
DeFi App introduced its token $HOME, which will be used to vote on buyback/fee-sharing models
Avalanche announced that FIFA is launching its own L1 blockchain on Avalanche
Aave Labs proposed enabling borrowing GHO stablecoin against Uniswap V4 LP positions
Infinex introduced Yaprun - a $6 million incentive campaign that rewards social contributions
US Senate has advanced the GENIUS stablecoin bill
Liquity V2, a novel CDP protocol, went live on Ethereum L1. V2 comes with user-set interest rates and multi-collateral support
Huma Finance introduced its token HUMA and allocated 5% of its token supply to the airdrop
That’s all for this week!
Until next time,
The DeFi Investor
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