Unchained Ep. 920 — The Stablecoin Competition Is On. Who Will Be the Winners and Losers?
Host: Laura Shin
Guests: Rob Haddock (Dragonfly, General Partner), Mert Mumtaz (Helios, CEO)
Date: October 10, 2025
Episode Overview
In this episode, Laura Shin sits down with Rob Haddock and Mert Mumtaz to unpack the explosive growth and competition in the stablecoin sector following major legislative changes in the US. The discussion centers on the future of stablecoins, the drivers behind new contenders, the user experience implications of proliferation, and the prospects for both incumbents and upstarts. They also analyze strategic differences between Tether, Circle, and newer entrants, explore the likelihood of bank-led stablecoin consortia, and touch upon technical and regulatory developments shaping this fast-changing landscape.
Key Discussion Points & Insights
1. Stablecoin Proliferation and User Incentives
[02:23–05:45]
- Explosion of Stablecoins: The number of stablecoin projects is rapidly increasing post-"Genius Act" legislation, with companies like Plasma, Stripe (with Tempo), Circle (with Arc), and app-driven coins (Phantom, Jupiter) entering the market.
- Nick Carter’s Thesis: While initial beliefs foresaw a few dominant stablecoins, current momentum suggests a multitude, as intermediaries and applications want to capture yield for themselves, not hand it to stablecoin issuers.
“Intermediaries will want that yield for themselves.” — Laura Shin [02:27]
- Incentive Structure: Rob emphasizes that the quest to “own the end customer” and the platform’s economics is fueling widespread issuance. Ecosystem stablecoins and white-label models (e.g., Agora, Paxos) facilitate this trend.
- Unbundling and Rebundling: The market is in an “unbundling” phase akin to fintech in the 2010s, which fragmented the traditional bank model before eventual consolidation.
“Right now, we’re in a period of unbundling. But I expect there’ll be a rebundling—that everyone realizes it kind of sucks to have all these different tokens.” — Rob Haddock [05:10]
2. Endgame Scenarios for the Stablecoin Market
[05:45–12:06]
- Future Market Shapes: Rob foresees either:
- A clearinghouse model shared across issuers (not optimal), or
- Consolidation around a handful of major stablecoins/brands (~5-7 at scale), with others closed-loop.
- Ticker Abstraction: Mert describes the user experience moving toward ticker abstraction, where apps display simple “USD” balances and route transactions to the best-backend stablecoin.
“Backpack just abstracts the tickers away so it’s just USD.” — Mert Mumtaz [07:36]
- Pareto Dynamics: The largest three or four coins will take most of the market due to network effects, with some possible geo-specific exceptions (e.g., heavy USDT/Tron usage in the Global South).
3. User Types and Network Effects
[14:55–22:45]
- User Segmentation:
- Retail users default to whatever coin/app is promoted and easy.
- Power users chase the best yield (e.g., “I keep swapping from USCC to PyUSD for higher rates” — Mert [14:55]).
- Tether’s Dominance:
- Tether wins by brand recognition, especially outside the West; users often request “Tether” rather than generically “USD,” creating powerful stickiness.
“I want Tether, right? Or I want Tetra, right? That’s what people say all the time.” — Rob Haddock [16:44]
- Trust and Risk:
- In the Global South, Tether is trusted, while institutions and conglomerates (especially in B2B) may prefer Circle for transparency and regulatory standing.
4. B2B vs. Retail Markets
[17:50–22:45]
- Retail Market:
- Dominated by brand and default app distribution.
- Yield and incentives can attract sophisticated users but have less mass impact.
- B2B Market:
- Much larger ($200T vs $20T for retail).
- Potential for trust, compliance, and direct settlement to unlock stablecoin potential for treasury, settlement, and global payments.
- Circle’s Institutional Edge: Seen as more trustworthy and compliant, especially for large enterprises. This could carve out a differentiated space from Tether’s retail dominance.
5. Stablecoins Beyond the Dollar: FX and Non-Fiat Exposure
[22:45–26:10]
- FX in Stablecoins:
- Mert flags the lack of robust FX facilities: users still struggle to shift value across currencies (e.g., ruble, euro) in the crypto ecosystem.
- Rob points out most demand is still in dollars, but envisions increased non-USD stablecoin use as “business conducted on blockchain rails” expands.
6. Tether’s Unique Position and Long-Term Risks
[27:24–34:04]
- Yield Non-Participation:
- Tether doesn’t share yield with users but hasn’t seen user attrition, as most care about familiarity, not DeFi returns.
“Familiarity matters much more than earning yield…it’s like Kleenex for tissue.” — Mert [31:32]
- Distribution Is King:
- Most users interact with Tether on exchanges or through localized peer-to-peer use; shifting those endpoints is existential risk.
- Long-Term Competitive Threats:
- If exchanges or major apps switch defaults (e.g., to Circle’s USDC), or if new models abstract away brands, Tether could lose ground.
- Paolo Ardoino’s Vision:
“I bet you Paolo cares more about Bitcoin than he does Tether itself.” — Rob [28:40]
7. Circle: Strategies and Headwinds
[35:56–42:54]
- Public Company, Payments Rails:
- Circle is more exposed, as its competitive advantage (regulation, transparency) could be eroded by bigger players (e.g., JPMorgan) entering.
- Racing to Scale:
- Circle has started sharing more yield (paying Binance and startups), compressing their margins.
- Arc and Strategy:
- Their new blockchain (Arc) is designed for money movement and end-customer integration, not just issuing a stablecoin.
“They know they need to scale as quick as possible…but also not just be a stablecoin issuer.” — Rob [36:50]
- Competitiveness vs. Tether:
- Mert: “Circle seems like the easiest short here over a long time horizon…[Tether] is doing roughly everything better.” [40:42]
- Unclear Market Fit:
- Ambivalence about being payments-focused vs. general-purpose chain may muddle their strategic edge.
8. The Rise of Stablecoin-Driven Blockchains
[42:54–47:44]
- Ease of Launch, Difficulty of Winning:
- Mert and Rob agree it’s easy to launch a chain, but actual adoption is tough.
- Design Choices:
- Purpose-built chains (e.g., for B2B payments) versus general-purpose ones—being “a little opinionated” is a strategic trap.
- Cautionary tale: Stellar aimed to be “the payments chain” (seeded by Stripe), but hasn’t become dominant.
“Anytime you try to please a lot of people, you probably end up pleasing none.” — Rob [47:37]
9. Restricting Chain Usage: Technical and Strategic Options
[47:44–52:35]
- Limiting Non-Payment Activity:
- Three approaches: Non-Turing-complete chains (e.g., Stellar), permissioned blockspace (active validator filtering), or sophisticated blockspace sequencing with prioritization (Tempo’s approach), but all pose difficult tradeoffs.
“If you’re permissioning the blockspace, at that point, I still don’t quite understand why you’re using a blockchain.” — Mert [48:23]
- Unintended Consequences:
- “It’s going to be a game of cat and mouse and MEV, and you’re going to descend into the [chaos] of crypto-native stuff.” [51:40]
- L2s Might Win:
- Mert suggests the L2 (layer two) approach offers more controlled enforcement for payments, avoiding some pitfalls of L1s.
10. Bank Stablecoin Consortia: Why They’ll Likely Lose
[52:35–54:45]
- Banking Consortia Track Record:
- While foundations like Visa/Mastercard originated this way, success is rare for new consortia in innovative markets.
- Cultural and Incentive Barriers:
- Banks lack aligned interests and tech dynamism; most in-house stablecoin talent reportedly leaving.
- Rob’s Take:
“Any time people tell me a bank is going to win at something, they just haven’t spent enough time working with banks.” [54:27]
- Mert’s Take:
- Having worked at Canadian banks, Mert calls them “an oligopoly of the incompetent” and encourages anyone working there to switch to crypto.
“It’s time for finance to enter the Internet era...” [54:49]
11. Privacy as a Critical (and Overlooked) Issue
[54:49–56:00]
- Concerns About Surveillance:
- Mert urges listeners to be vigilant about privacy aspects in stablecoin infrastructure.
- Acknowledges Zcash and other privacy innovations, but advocates “privacy over no privacy” broadly.
Notable Quotes & Moments
- On the proliferation of stablecoins and incentives:
"Whoever the application is ... they're going to want to have their own stablecoin because that is the easiest way for them to potentially own how economics are distributed." — Rob Haddock [00:00]
- On network effects:
“Money is generally a network business, so network effects are going to win out for the larger players.”
— Mert Mumtaz [12:06] - On Tether’s unassailable brand:
"It's like Kleenex for tissue ... that's an extremely difficult network effect to beat."
— Mert Mumtaz [31:32] - On Circle’s strategic disadvantage:
"Their position is definitely more tenuous ... They need to scale as quick as possible, but also not just be a stablecoin issuer."
— Rob Haddock [36:50] "Circle seems like the easiest short here over a long time horizon."
— Mert Mumtaz [40:42] - On stablecoin L1 design traps:
"Being a little bit opinionated is like the absolute worst place to be."
— Rob Haddock [45:17] “Every time you try to please a lot of people, you probably end up pleasing none.”
— Rob Haddock [47:37] - On banks' chances:
“Any time that people tell me that a bank is going to win at something, they just haven’t spent enough time working with banks.”
— Rob Haddock [54:27] “If you’re working at a bank, you should quit like ASAP and come join crypto. ... It’s time for finance to enter the Internet era.”
— Mert Mumtaz [54:49]
Important Timestamps
| Timestamp | Segment | |------------|----------------------------------------------------------------------------------------| | 02:23–05:45| Unbundling: Why so many stablecoins are launching now | | 05:45–12:06| Possible market structures, endgame scenarios, abstraction and user experience | | 14:55–22:45| User types: retail vs. sophisticated; network effects; Global South dynamics | | 22:45–26:10| FX and the (still-limited) demand for non-USD stablecoins | | 27:24–34:04| Tether’s yield strategy, role of distribution, existential risks | | 35:56–42:54| Circle’s new chain (Arc), competitive position, yield compression | | 42:54–47:44| Launching and positioning new stablecoin blockchains – general purpose vs. specialist | | 47:44–52:35| Can you technologically limit usage to “just payments”? Strategic tradeoffs | | 52:35–54:45| Bank stablecoin consortia: prospects and challenges | | 54:49–56:00| Final thoughts: privacy concerns, exhortations to bank employees |
Flow & Tone
The conversation combines technical depth with industry wit and blunt realism, especially from guests Rob and Mert. Laura drives clarity and keeps the discussion grounded in both retail and institutional perspectives. Both guests blend personal anecdote, macro trends, and inside baseball observations—striking a balance between optimism for new entrants and skepticism toward legacy attempts, like banks or ambiguous use-case chains.
Summary in One Sentence
The stablecoin race is shifting from a few dominant players to an era of mass proliferation, driven by platforms’ desires to own user economics, with the ultimate winners likely determined by network effects, distribution control, and strategic clarity—though privacy and UX challenges loom large and banks, as ever, lag behind.