Second Generation Stablecoins Ignite the Next Wave of Crypto Adoption

The Current State of Blockchain Adoption

In the aftermath of the 2017 bull run and the subsequent crash in 2018, blockchain technology finds itself facing a significant challenge. One of the main barriers is the insufficient real-world adoption of the technology. Despite notable interest from institutional investors, the existence of billions in value, and a plethora of proposed applications, the actual utilization of blockchain remains disappointingly low. Many individuals involved with cryptocurrencies are primarily traders who frequently switch between digital assets, rather than using them for their intended purposes. The vision of a decentralized token economy still feels distant.

A major obstacle to widespread adoption is the volatility of cryptocurrencies. To qualify as effective money, a medium must serve three primary functions: a unit of account, a store of value, and a medium of exchange. However, most cryptocurrencies fulfill only the role of a medium of exchange due to their aggressive price fluctuations. This has led to an influx of stablecoin projects—digital assets pegged to more stable currencies like the US dollar. Although these assets are simpler to understand and the decentralized finance sector has seen significant growth (with $650 million locked in smart contracts, compared to $400 million the previous year), a large number of individuals are still unfamiliar with stablecoins like Tether or Dai. Moreover, there are still numerous challenges faced by those attempting to use blockchain technology effectively.

Overall, while the landscape is evolving, significant obstacles remain before blockchain can achieve meaningful and widespread adoption.