Global demand for stablecoins surges, Ethereum may become the biggest beneficiary

The global demand for the US dollar is experiencing explosive rise. Despite discussions about "de-dollarization", a more significant trend is emerging: over 4 billion people and millions of businesses are actively seeking to acquire US dollars through stablecoin, representing the largest expansion of the dollar's network effect in decades.

This has created unprecedented opportunities for Ethereum. Stablecoins provide a channel for individuals worldwide to access US dollars - increasing 60 times since 2020, exceeding $200 billion - millions of new dollar holders need more than just digital cash. They need yields, investment opportunities, and financial services. Traditional finance cannot serve this vast new market due to regulatory and infrastructure limitations.

Ethereum has unique advantages that can provide global financial infrastructure for this new digital dollar economy, and ETH will directly benefit from this rise.

Millions of new dollar holders enter through stablecoin

There is a huge potential demand for the US dollar from individuals and businesses worldwide.

People around the world hope to secure safety with the US dollar:

• Due to political instability, poor monetary policy, and structural inflation, over 4 billion people face significant currency risks.
• It is estimated that 21% of the global population lives in countries with an annual inflation rate exceeding 6%, which quickly erodes savings and purchasing power.
• For these groups of people, holding US dollars means financial security. The dollar is seen as a means of storing value, a method for cross-border transactions, and a way to hedge against fluctuations in local currency.

Businesses need US dollars for transactions:

• The US dollar remains the dominant currency in global trade, with 88% of global foreign exchange transactions involving the dollar on at least one side.
• Companies in emerging markets rely on USD liquidity for international payments, imports, and supply chains, while local banks and foreign exchange markets in these markets are often limited or unstable.
• Small and medium-sized enterprises and freelancers increasingly need digital dollars to receive payments and avoid currency mismatch risks.

For the first time in history, anyone in the world can hold US dollars through stablecoins:

• Anyone with internet access can hold and trade dollars - no banks, no government permission, available globally 24/7.
• Therefore, since 2020, the market value of stablecoins has risen 60 times.
• Adopt peaks concentrated in emerging markets that were previously excluded from dollar-denominated finance. Nigeria has become the world's second-largest cryptocurrency market, while China remains under a ban, and the application of underground cryptocurrency continues.

Stablecoins are creating a new group of dollar holders among the world's largest population—businesses are pricing in USDT, and households are saving in USDC. They are driving a fundamental expansion of the dollar financial services market.

These new dollar holders seek returns, creating opportunities for new global financial infrastructure.

Stablecoin holders want to make their money work.

Today, millions of people can hold dollars through stablecoins. But their aspirations go far beyond that. Individuals and businesses naturally want to use their funds to earn returns, invest, and achieve wealth rise.

Traditional finance cannot serve this new market:

• The US banking system requires compliance with regulatory regulations, excluding most global participants.
• Cross-border financial services are still expensive, slow, and geographically limited.
• Traditional finance is built for institutions and high net worth individuals rather than global retail.
• Geographic and regulatory barriers hindered billions of dollars from participating in dollar-denominated financing.

This has created a demand for new financial infrastructure that can serve billions of stablecoin holders around the world, enabling them to utilize the new dollar.

Ethereum meets all the requirements to serve global stablecoin holders.

The new financial infrastructure that provides services for stablecoin holders must meet three key requirements:

• Globally available — must be applicable in any place with internet access, from New York to Nigeria, to rural Nepal. Due to geographical location or regulatory reasons, most areas of the world cannot access USD-based financing.
• Security for institutions - It is essential to provide the security, reliability, regulatory clarity, and customizability required for institutions to build financial products worth billions of dollars.
• Resist government intervention - must not be controlled by any single government, as many governments prefer to limit the circulation of the dollar to protect local currencies and control capital flows.

Ethereum meets all three requirements:

• Globally Accessible: Anyone in the world with an internet connection can use Ethereum 24/7.
• For institutional security:
  • Security - The most economically secure and decentralized among all programmable blockchains. The most mature security infrastructure - with the most open-source developers, verified contracts, security auditors, and tools.
  • Reliable - Able to maintain 100% uptime for 10 years, regardless of market crashes or geopolitical events.
  • Compliance with regulatory requirements - US regulators classify ETH as a commodity, thus providing a clear institutional framework.
  • Customizable - Ethereum's L1+L2 framework achieves customizability, allowing institutions to optimize for specific use cases and meet regulatory requirements.
  • Outstanding performance record - boasts the world's largest digital financial economy: a market cap of over $140 billion in stablecoins, over $60 billion invested in decentralized finance (DeFi) protocols, and tokenization of real-world assets valued at over $7 billion.
• Resist government intervention: The government cannot occupy a single control point to control or restrict the network.

Ethereum uniquely meets these requirements with its powerful decentralized characteristics — its origin story is nearly impossible to replicate today.

• The powerful decentralization makes Ethereum accessible, secure, and reliable globally, and able to withstand government intervention.
• This level of decentralization is rooted in the origins and culture of Ethereum.
  • Ethereum was originally a blockchain funded by the community and adopted a proof-of-work mechanism, which made its asset ownership very broad. However, the current environment makes it no longer suitable to launch in this way.
  • Its culture has always prioritized decentralization—maintaining a costly diversity of clients and resisting centralized shortcuts—making this culture nearly impossible to transform.
• As a result, Ethereum has a decentralized advantage that other chains cannot easily replicate, providing Ethereum with a lasting moat.
  • Over 1 million validators spread across more than 100 countries
  • Multiple independent development teams ensure resilience and the largest open-source developer ecosystem
  • Due to the community-funded launch and the origin of proof of work, asset ownership is widespread.

Ether as a reserve asset in the digital dollar economy may see an increase in demand.

In any financial system, reserve assets are the trustworthy foundational layer that supports everything. They are the collateral, savings, or liquid assets held by institutions, protocols, and users, used for value storage, loan guarantees, and transaction settlements.

In traditional systems, the US dollar, US Treasury bonds, and gold are examples of reserve assets because they are reliable, highly liquid, and widely accepted.

As billions of dollars flow through stablecoins on Ethereum, participants need a secure, permissionless, and efficient asset to support lending, staking, and yield generation. ETH has a unique advantage in this regard because:

• Scarce and reliable: The supply of ETH is predictable, with a low inflation rate and not subject to central control.
• Productive: Unlike gold or static dollars, ETH generates income through staking - similar to the way income is generated from holding real estate or government bonds.
• Utility of Collateral: ETH is already the largest on-chain collateral asset in the Ethereum ecosystem, supporting lending protocols worth $19 billion. Institutions hold it because they need it to enter the DeFi market.
• Anti-seizure and anti-censorship: ETH cannot be frozen or seized by the government, making it more resilient than centrally issued assets.
• Programmable and highly liquid: ETH is deeply integrated into the entire on-chain financial system, providing unparalleled liquidity for large transactions.

As more and more users hold stablecoins and require financial services, they need a reserve asset to support these activities. Ether can earn yields, secure the network, and support DeFi lending—therefore, as the system evolves, the demand for Ether will naturally rise.

In simple terms: more adoption of stablecoins → more on-chain activities → more demand for ETH as collateral → institutions and users holding more ETH.

The rise of Ethereum Layer-2 has further stimulated the demand for ETH. By lowering transaction costs, speeding up transaction times, and enabling new use cases, Layer-2 has opened up more areas for ETH to be used as collateral. This expands the reach of ETH and reinforces its position as a reserve asset in the digital dollar economy.

Ether is expected to become a global store of value.

The rising demand for Ether has also allowed it to occupy a large share of the traditional value storage market.

• Like Bitcoin, Ethereum has superior store of value (SoV) characteristics compared to traditional assets like gold.
• ETH and BTC will not compete with each other, but may share a piece of the traditional SoV assets (gold, government bonds, stocks, real estate) valued at $5 trillion in the coming years.
• In addition to having the SoV property of Bitcoin, ETH also provides earnings for holders.
• Income generation is a major benefit, as investors generally favor income-generating assets. American households hold approximately $32 trillion in dividend stocks, while the value of the gold they hold is less than $1 trillion.

Conclusion: Holding Ether may be the best way to participate in the rising stablecoin economy.

The rise of the stablecoin economy has created a powerful flywheel for Ethereum and Ether.

As more stablecoins are put into use on Ethereum, the demand for ETH has also increased. The higher value of ETH and a more secure network have attracted more institutions and services, further promoting the adoption of stablecoins.

Alternatives face significant challenges in replicating this flywheel:

• Traditional finance cannot serve the billions of people excluded due to geographic and regulatory barriers.
• Government-controlled systems are still subject to political influence and jurisdictional limitations.
• Bitcoin lacks the programmability of complex financial services.
• Other blockchains lack the security, reliability, and customizability required by institutions, as well as the decentralization needed to resist government intervention.

The result is: Holding Ether may be the simplest and most effective way to engage with the continuously rising stablecoin economy.

• You can also choose to invest in specific DeFi protocols that benefit from the expansion of stablecoins. However, this carries a higher risk and requires expertise.
• For most retail and institutional participants, ETH provides the simplest access to the entire digital dollar ecosystem.

![Why is holding ETH the best way to participate in the stablecoin wave?](