[pavlov]

Stablecoins seem like the stereotypical ZIRP (zero interest rate phenomenon).

When you couldn’t get a return on deposits (or safe government debt) anyway, it didn’t seem completely crazy to park your dollars with a company that doesn’t pay interest either, but at least lets you do highly leveraged trading against hapless crypto retail investors around the world.

Now that the crypto retail boom is over and money has a price again, the notion of sending your dollars to a one-horse-show outfit like Tether or Paxos is much less appealing. They can vanish overnight and you don’t even have the $250k federal insurance like on US bank accounts.

[delabay]

Stablecoin operators are making money hand over fist in the post-ZIRP era. Real, actual revenue.

If crypto has demonstrated clear PMF for anything, it's that the world loves stablecoins denominated in dollars.

[pavlov]

You have to ask, who are the people who love this product? Sure, if you make moving dollars easy, there are people who will use it. But is it an investment product at all?

Here’s an example of how Tether gets used in the real world:

“I’d been hearing rumors about illicit uses of Tether—I’d seen court documents containing intercepted messages from a Russian money launderer promoting it to his clients, for one thing—but pig butchering was the most concrete example I found. People around the world really were losing huge sums of money to the con. A project finance lawyer in Boston with terminal cancer handed over $2.5 million. A divorced mother of three in St. Louis was defrauded of $5 million. And the victims I spoke to all told me they’d been told to use Tether, the same coin Vicky suggested to me. Rich Sanders, the lead investigator at CipherBlade, a crypto-tracing firm, said that at least $10 billion had been lost to crypto romance scams.”

https://www.bloomberg.com/news/features/2023-08-17/my-crypto...