I have been working in the blockchain industry for three years now, and I have witnessed three-quarters of the Gartner hype cycle as far as this industry is concerned.
For the past few months, the industry has been in the trough of disillusionment. Millions of dollars have been lost in DeFi hacks, speculators with inflated expectations have pivoted to AI and AI agents, protocols have shut down, and an enormous number of people have been laid off.
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Despite the headwinds, we are moving towards the slope of enlightenment with stablecoins. The ERC-20 token standard is one of the most practical and successful innovations in the Ethereum ecosystem. It’s a very simple concept. Simpler than automated market makers and other important concepts in Ethereum, yet on top of it, we have built products that have found product-market fit.
In countries where the local currency is very volatile, dollar stablecoins have been an easy path to hedge against that FX risk. In countries where dollars are rationed and scarce due to macroeconomic realities that no one other than the state can fix, dollar stablecoins have been a way to access dollars easily. Except they aren’t really dollars because they don’t earn interest, but they have opened doors to invest in tokenized versions of global financial instruments that would otherwise have been very difficult to access without stablecoins.
Businesses sending money across borders have been using stablecoins because money on stablecoins travels at the speed of the internet. Almost as fast as a text message. Money in the banking system does not travel at the speed of the internet.
The reason is that every financial institution has its own system and records for money and claims on money. Any time it wants to send money to another institution, a lot of processes and due diligence have to happen, and the receiving institution still has to go through its own processes and due diligence to repack the money into its own systems and records. It’s a fragmentation problem. Institutions are fragmented.
An analogy I like to use is trade before the invention of containers. Goods were packaged in bales, sacks, or crates at the factory. Each of these required special handling and repeated counting at every step of the supply chain. From the factory to the trucks, to the train, to the ship. A lot of time was spent at the port instead of at sea.
Then Malcom McLean invented the shipping container. Everything in the supply chain was redesigned to handle containers. Trucks, trains, etc. Goods would be packaged in containers at the factory and, with limited human help, could be transported to the port. The time spent at the port was dramatically reduced.
Stablecoins are to money what containers were to trade. Package money into a digital standard that apps, exchanges, and wallets understand. This solves the problem of fragmentation. If all money in the world follows this standard, which in the case of EVM is the ERC-20 standard, it allows for greater interoperability between systems and greater programmability. All money flows through the same shared rails.
Things like onchain FX for currencies that have never traded with each other would be possible using stablecoins. As long as two currencies follow the same standard, they can be locked in a smart contract, and we could build FX exchanges.
Banks and fintechs spend a lot of money prefunding dollar accounts just to make international cross-border trade happen. The prefunding is very expensive, and they usually have to work with credit lines to settle the last mile, as dollars can take time to settle. If money followed the same standard, it would be possible to build solutions that could reduce the amount needed to prefund.
On top of the ridiculous amounts that need to be prefunded, institutions often face FX risk, especially when facilitating cross-border trade. Some currencies are very volatile. Stablecoins could allow for onchain hedging solutions to such problems. A good example is Blockfinax, a company building an FX hedging layer on top of stablecoins.
Part of the reason I think stablecoins are going to make it to the end of the Gartner hype cycle is what James C. Scott called legibility. The state loves things that are standardized. If something is standardized, it’s easier to observe, understand, and control.
There are so many things, like NFTs, that did not survive the full cycle, and I think it’s just the nature of things. Survival of the fittest and natural selection. Stablecoins survived because legible things are more likely to be preferred by states and regulators than illegible things. It was just inevitable.
On 22nd June 2026, I published an article titled “Preserving Monetary Sovereignty in a Stablecoin World.” It was a message to regulators and policymakers.
It is a little bit worrying that stablecoin adoption in many parts of emerging markets has mostly been dollar stablecoins: USDC and USDT. This has led to dollarization of the economy, and it’s what central banks fear most. The thing about dollarization is that it spreads like a disease. If people buy USDT and USDC at scale, of course some FX exchange is happening somewhere. People are selling the national currency for dollars. If they do this because the local currency is depreciating, the more they do it, the more the local currency depreciates, and the more people want to hold USDC.
What regulators and policymakers need to understand is that there is no rule that says a stablecoin has to be a dollar. You can put a claim on a national currency inside the digital container, ERC-20, and it’s a stablecoin. It will move faster, and apps and exchanges worldwide will recognize it.
That’s a real choice that policymakers and regulators have: to decide whether citizens are going to use dollar stablecoins or their own stablecoins.
There are some exceptions where this would be useful beyond interoperability with global systems. For example, in Kenya, mobile money works great. It’s as fast as a text message. I met with a guy who served as CEO of a Tier 2 bank in Kenya for 10 years, and he told me you can even send a million dollars instantly in Kenya. So beyond interoperability, stablecoins won’t bring much additional value in some countries like Kenya because mobile money already solved that problem.
For cross-border trade, stablecoins have a chance. For example, if the PAPSS system ran on stablecoins, it would allow for more programmability and interoperability.
One thing I was naive about when I became a founder was believing that stablecoins alone would solve the payments problem in Africa. Sending money across borders would be instantly fixed by stablecoins. I was wrong.
Stablecoins are just a standardization and messaging layer. For money to move across the globe, especially at scale, dollar liquidity is needed. Small transactions seem instant, but they usually aren’t. It’s instant for the user because the remittance platform or payments platform has access to credit lines for last-mile operations. But for the real money to move, it requires settlement between institutions.
Dollar liquidity is usually needed for most of global finance. And it’s very expensive. To build a successful fintech company, it’s very expensive. The programmability that stablecoins bring is what can shrink this liquidity requirement when combined with approaches like netting.
Global finance still requires the dollar, and there are a lot of structural forces making sure this stays so for longer. A consequence of Bretton Woods, which made the dollar king.
I feel like the dream of Keynes, who lost to the dollar at Bretton Woods, can sort of come true on a small scale through stablecoins. Some people are doing research on implementing such a system on top of stablecoins to make cross-border payments in Africa. Here is an example: Clearing Without the Politics.
I’m still quite optimistic about this technology and really happy to be part of it.
What a time to be alive.
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