Second Generation Stablecoins Propel Next Wave of Crypto Adoption

Following the fluctuations of the 2017 bull market and the subsequent crash in 2018, the blockchain industry finds itself at a crossroads. One major barrier to progress is the insufficient real-world adoption of blockchain technology. Despite significant interest from institutions, considerable value has been invested, and numerous applications have been proposed, the actual use of blockchain remains limited. Many so-called users are primarily traders who frequently switch between digital assets, most of which are primarily traded rather than utilized for practical applications. The vision of a decentralized token economy seems distant.

The issue of stability, or rather the absence of it, has emerged as a crucial obstacle to wider adoption. Traditional money functions as a unit of account, a store of value, and a medium of exchange, but most cryptocurrencies fulfill only the last role due to extreme volatility. This discrepancy has led to an increase in stablecoin initiatives—assets that are pegged to familiar currencies like the US dollar. However, despite these more comprehensible assets and the rise of decentralized finance, which has seen a significant increase in total value locked in smart contracts, many people remain unfamiliar with stablecoins like Tether or Dai. Moreover, this situation doesn’t even begin to address the practical difficulties individuals encounter when attempting to use blockchain technology.