Second Generation Stablecoins Propel the Next Wave of Crypto Adoption

The fluctuations of the 2017 bull market and the subsequent crash in 2018 have left the blockchain industry at a crossroads. A significant barrier to mainstream adoption is the limited real-world usage of the technology. Despite considerable institutional interest, billions of dollars in value, and a plethora of proposed applications, the practical application of blockchain technology remains minimal. Many individuals engaging with cryptocurrencies act more as traders, swiftly moving between various digital assets that are primarily utilized for trading rather than for any other purpose. The anticipated decentralized token economy still appears elusive.

Volatility has emerged as a major obstacle to acceptance. The three core functions of money are as a unit of account, a store of value, and a medium of exchange. However, most cryptocurrencies primarily fulfill only the latter role, due to their extreme price fluctuations. This has led to the proliferation of stablecoin initiatives—assets linked to established currencies like the US dollar. Yet, despite the straightforward nature of these assets and the growth of decentralized finance, which has seen a rise to $650 million locked in smart contracts compared to $400 million the previous year, awareness remains low. Many people are still unfamiliar with stablecoins like Tether or Dai, and this gap only scratches the surface of the challenges individuals encounter in trying to use blockchain technology.