Navigating the Future: Leadership Insights and Upcoming Challenges

Stablecoins making strides

Stablecoins have just recorded their most significant quarter ever, with an estimated $45.6 billion to $46.0 billion in net formations in Q3.

This signifies a 324% increase from Q2’s $10.8 billion and is a clear indication that new capital is re-entering the market.

The increase stemmed from various issuers: Tether’s USDt (USDT) contributed approximately $19.6 billion, Circle’s USDC (USDC) saw about $12.3 billion and Ethena’s USDe (USDe) around $9 billion, a combination that merges established scale with rising interest in innovative, yield-linked structures.

Looking at the broader picture, the overall stablecoin supply now ranges between $290 billion and $310 billion. DefiLlama indicates roughly $300 billion outstanding, while recent industry estimates suggest it is closer to $290 billion over the past 30 days.

Regardless, the situation remains consistent: A more extensive, highly liquid stablecoin base supports trading, underpins decentralized finance (DeFi) collateral, and facilitates cross-exchange settlement.

Did you know? “Net formations” refer to the minted tokens minus redemptions — the most accurate measure of the new supply remaining post cash-outs.

Which stablecoins led the way?

The majority of Q3’s net growth was concentrated around three stablecoins:

• USDT: Leading with $19.6 billion in formations, solidifying its power across centralized platforms and layer-1 (L1) and layer-2 (L2) networks.

• USDC: Trailing with $12.3 billion, exhibiting acceleration corresponding with broader distribution and simpler access points.

• USDe: Added $9 billion, highlighting demand for yield-linked formats even amid ongoing discussions regarding risk, design, and market conditions.

Apart from the top three, PayPal’s USD (PYUSD) and Sky’s USDS recorded approximately $1.4 billion and $1.3 billion in quarterly inflows, respectively. New entrants like Ripple’s RLUSD and Ethena’s USDtb also noted smaller but steady gains from a low starting point.

As we approach the next quarter, two pressing questions arise: Can USDC continue to narrow the gap with USDT? And can USDe maintain its high velocity as market dynamics evolve and regulatory or policy changes impact?

Did you know? Under the EU’s Markets in Crypto-Assets (MiCA) framework, a stablecoin can be designated as “significant” if it meets criteria such as over 10 million users, over 5 billion euros in value/reserves, or more than 2.5 million transactions daily (and over 500 million euros in daily value), activating stricter European Banking Authority (EBA) oversight.

Where the funds settled

Onchain, the bulk of new funds are settled where liquidity already exists.

• Ethereum maintains its dominance, holding over 50% of the total stablecoin supply (more than $150 billion).

• Tron remains a solid second with about $76 billion, acting as the preferred pathway for low-fee, retail-style transfers.

• Solana has ascended into third place, hosting over $13 billion in native stablecoins as DeFi activities and payment use cases expand.

This distribution reflects user experiences on a daily basis: Ethereum for liquidity and interoperability, Tron for speed and minimal costs, and Solana for a seamless, high-output experience.

What’s driving the stablecoin resurgence?

A blend of policy transformations, market dynamics, and infrastructure enhancements contributed to this momentum.

• Policy clarity: The GENIUS Act introduced the first US framework for payment stablecoins, instilling issuers and networks with greater confidence to expand.

• Yield and carry: Compelling front-end rates and the increase in tokenized US Treasurys — which rose from roughly $4 billion in early 2025 to more than $7 billion by June 2025 — attracted additional capital onchain.

• Improved infrastructure: Wider payment and exchange interoperability, coupled with quicker and cheaper L1/L2 systems, have made stablecoin utilization more fluid than a year prior.

• Risk allocation: Part of the surge is attributed to “dry powder,” as investors parked assets in stablecoins during volatile market conditions.

Successes and what the figures conceal

USDT and USDC captured most of the new capital, aided by their listings on exchanges, extensive trading pairs, and easy access through banking institutions and apps.

Combined, they constitute more than 80% of the market, and recent US regulations only bolster their position.

Ethena’s USDe also expanded swiftly by providing yield, but it relies on effective hedging and market conditions — any disruption could challenge its stability.

PayPal’s PYUSD gained ground due to its distribution strategy, while Binance USD (BUSD) continued its decline, highlighting the importance of licensing and banking partners.

Nevertheless, record growth doesn’t equate to record usage: In the last month, active addresses dropped by approximately 23%, and transfer volume decreased 11%. Much of the new supply appears more like cash held on the sidelines than funds actively circulating through the system.

Liquidity remains thin across venues and chains, resulting in more pronounced fluctuations during stressful periods. New designs like USDe bring fresh interest but also involve additional risks, which have already attracted heightened regulatory scrutiny in Europe.

The headline statistic is substantial, but the core inquiry is whether that supply transforms into sustained activity.

What to monitor next

Here are several key indicators to observe as the market evolves.

• Creations vs. redemptions: Was Q3’s $46-billion spike a one-time occurrence or the onset of a new cycle?

• Issuer dynamic: Can USDC continue to close the gap with USDT, and can USDe uphold growth without fluctuations in stability? Reserve disclosures will be crucial indicators.

• Chain transitions: Ethereum, Tron, and Solana will persist in vying for market share — observe whether these shifts are permanent or temporary.

• Infrastructure and ETFs: SEC listing criteria and CME’s new SOL options could stabilize inflows by enhancing liquidity and hedging.

• Policy implementation: The GENIUS Act’s regulations in the US and MiCA in Europe will influence who issues, where, and under what conditions.

• Onchain dollar portfolio: Tokenized Treasury bills and money market funds are developing the “yield tier” alongside stablecoins, likely retaining more balances onchain.

Ultimately, the $46-billion figure signals demand, but the true challenge is whether that supply continues to circulate, enhance liquidity, and withstand the subsequent policy or market shock.