Scenario is king: Reconstruction of stablecoin competition landscape and migration of value focus

Written by Aiying Compliance

With Circle's successful listing on Nasdaq, the stablecoin market is also undergoing a structural reshaping. While the market is paying attention to Circle's $5 billion market value and its stablecoin business model, a deeper transformation is taking place: the value creation center of stablecoins is migrating from the simple "issuance" link to "creation, empowerment and in-depth application scenarios." This is not a simple adjustment of business strategy, but a fundamental reconstruction of the value logic of the entire industry. Through in-depth analysis of the driving factors, market structure and development path of this transformation, we will see that the core of the future competition of stablecoins is not "who can issue more coins", but "who can create and control more valuable application scenarios."

1. Shift in value focus: from distribution hegemony to scenario competition

When we analyze the development trajectory of the stablecoin industry, a clear pattern emerges: this field is shifting from "issuance-centric" to "scenario-centric". This shift is not accidental, but the result of the joint promotion of five structural forces.

The squeeze effect in the issuance link. Circle's prospectus reveals a key reality: even as the second largest issuer in the market, it must pay 50% of its own net interest income (NII) to Coinbase as a distribution subsidy. This costly distribution model exposes the substantial compression of the profit margin in the issuance link. As excess profits are reduced, market participants are forced to explore other links in the value chain, especially at the application scenario level.

The network effect of the issuance link has been solidified. As a medium of value, the utility of stablecoins depends largely on the degree of acceptance - the more people use a certain stablecoin, the more valuable it is. This typical network effect has enabled USDT to firmly occupy 76% of the market share, USDC to maintain its position of 16% with difficulty, and all other competitors share the remaining 8%. This market structure has been highly solidified, and it is difficult for new entrants to shake the existing pattern by simply issuing new stablecoins.

Fundamental shift in regulatory orientation. The global stablecoin regulatory framework is shifting from "risk prevention" to "promoting innovation and focusing on application". The US "GENIUS Act" clearly distinguishes "payment stablecoins" from other types of stablecoins, and designs a specific compliance path for the former; the "Stablecoin Issuer Regulations" officially passed and implemented by Hong Kong on May 21, 2024 not only regulates issuance activities, but also provides a clear legal framework for innovative applications based on stablecoins; the Monetary Authority of Singapore (MAS) further divides stablecoins into "single currency stablecoins" (SCS) and other types, and designs differentiated regulatory measures for different scenarios. These regulatory trends point in one direction: the value of stablecoins will increasingly depend on their performance in actual application scenarios, rather than simply the scale of issuance.

Qualitative change in user demand. The sign of the market's increasing maturity is that user demand has shifted from simply holding stablecoins to solving specific problems through stablecoins. Early users may be satisfied with simply holding a "digital version of the US dollar", but users in mature markets expect to see actual application value beyond speculation. This shift in demand forces market participants to shift their focus from "minting more tokens" to "creating more uses."

Sustainability considerations for business models. As competition in the stablecoin market intensifies, business models that rely solely on seigniorage and issuance scale face long-term sustainability challenges. Competition in the issuance process will lead to higher bidding for reserve fund yields, squeezing profit margins. In contrast, the development of application scenarios can bring a more diversified income structure, including transaction fees, value-added service fees, and financial product revenue sharing, providing a more sustainable business model for participants in the stablecoin ecosystem.

These five forces are jointly driving the transformation of the stablecoin industry from "issuance war" to "scenario competition". Looking at the development history of the industry, we can clearly identify three stages of development:

1. Proof of concept period (2014-2018): Stablecoins were accepted by the market as a concept, mainly to meet the liquidity needs of the crypto trading market

2. Transaction medium period (2018-2023): Stablecoins have consolidated their position in transaction scenarios, and the amount of minting has increased dramatically

3. Practical Value Period (2024-): Market focus shifts from issuance scale to development of actual application scenarios and value creation

We are at the beginning of the third stage, and the core competition in this stage will revolve around "who can create more valuable application scenarios". It is crucial for market participants to understand this shift because it will redefine the criteria for success and the model of value distribution.

2. Deepening the use of scenarios: the value of stablecoin applications

To truly understand the underlying logic of "scenario is king", we need to penetrate the superficial technical discussion and deeply analyze the specific mechanism of stablecoins creating value in different application scenarios. This analysis cannot stop at the simple statement of "improving efficiency" and "reducing costs", but needs to analyze the inherent complexity of each scenario, the existing pain points and the transformative potential of stablecoin technology.

1. B2B cross-border payments and trade finance: Beyond simple “fund transfer”

The problem of B2B cross-border payments is far more complex than it appears. The traditional narrative often focuses on the speed and cost of payments, but the real pain point lies in the fragmentation and uncertainty of the entire cross-border payment and trade finance ecosystem.

When an Asian business pays a European supplier, the challenges it faces include:

• Exchange rate risk management: During the lag period between payment decision and funds arrival, exchange rate fluctuations may erode the value of 1-3%

• Liquidity segmentation: The capital pools of enterprises in different markets are isolated from each other and cannot be effectively integrated

• Uncertainty in settlement time: The arrival time of traditional cross-border payments is highly variable, which brings difficulties to supply chain management and cash flow planning.

• Payment compliance complexity: Cross-border payments involve multiple regulatory frameworks, with high compliance costs and significant risks

• Finance and payment disconnection: Payment and trade finance (such as letters of credit, factoring, and supply chain financing) lack seamless connection

The value of stablecoins in this scenario lies not only in accelerating fund transfers, but also inBlockchainTechnology, creating a comprehensive value system:

• Programmable payment conditions: Payment can be automatically associated with trade events (such as cargo shipment confirmation, quality inspection passed), realizing programmatic control of trade processes

• Real-time foreign exchange processing: Minimize the risk of exchange rate fluctuations through intelligent routing and real-time pricing of multi-currency stablecoin pools

• Liquidity integration: cross-market and cross-currency liquidity can be managed uniformly on the same infrastructure, significantly improving the efficiency of capital use

• 贸易金融的程序化：信用证、应收账款融资等传统贸易金融工具可转化为Blockchain上的智能合约，实现自动执行和风险管理

This comprehensive value enhancement goes far beyond simple efficiency improvements. It actually reconstructs the entire B2B cross-border payment and trade finance operation model. It is worth noting that realizing this vision requires solving many practical challenges, including legal framework adaptation (the legal effect of smart contracts in different jurisdictions), legacy system integration (interconnection with enterprise ERP and bank core systems) and cross-chain interoperability (value transfer between different blockchain networks).

2. Real Asset Tokenization (RWA): Creating a New Internet of Value

Tokenization of physical assets is another application scenario of stablecoins with transformative potential, but its complexity and challenges are often underestimated.

In the traditional financial system, physical assets (such as real estate, commodities, and private equity) have a significant liquidity discount, which is caused by multiple factors such as high transaction costs, limited market participants, and inefficient value discovery mechanisms. The tokenization of physical assets promises to reduce this discount through blockchain technology, but to truly realize this promise, a complete ecosystem is needed, and stablecoins are the key infrastructure of this ecosystem.

Stablecoins play three key roles in the RWA ecosystem:

• Value Bridge: Connecting on-chain tokenized assets with fiat currencies in the traditional financial system

• Medium of exchange: providing liquidity and counterparties for tokenized assets

• Income distribution channel: Provides an automated distribution mechanism for income generated by assets (such as real estate rents, bond coupons)

Taking real estate tokenization as an example, the deep integration of stablecoins can create a new value model: investors can purchase tokenized real estate shares through stablecoins, rental income can be distributed to token holders in real time in the form of stablecoins, and tokens can be used as collateral to obtain liquidity on stablecoin lending platforms. All of these operations can be automatically executed through smart contracts without the need for traditional intermediaries.

However, the realization of this scenario faces complex challenges:

• Legal connection between on-chain and off-chain assets: How to ensure the legal relevance and enforcement mechanism between on-chain tokens and off-chain assets

• Trusted value input problem: How to reliably input off-chain asset information into the on-chain system (oracle problem)

• Complexity of regulatory compliance: Tokenized assets may be subject to multiple regulatory frameworks such as securities law, commodity law, and payment law.

In this scenario, if stablecoin issuers only focus on maintaining currency stability without participating in building a broader RWA ecosystem, it will be difficult to capture the value of the scenario. On the contrary, those participants who can provide comprehensive solutions that integrate stablecoin payments, asset tokenization, transaction matching, and compliance management will dominate this field.

3. Cross-ecological connector: a bridge between DeFi and traditional finance

There are two parallel ecosystems in the current financial system: decentralized finance (DeFi) and traditional finance (TradFi). Each of these two ecosystems has unique advantages: DeFi provides permissionless access, programmability, and extremely high capital efficiency; TradFi has regulatory certainty, deep liquidity, and a broad user base. In the long run, the value of these two systems will be maximized through connection rather than substitution.

Stablecoins are becoming a key link between these two ecosystems because they have the attributes of both worlds: they are tokens on the blockchain that can interact seamlessly with smart contracts, and they represent the value of legal tender and are compatible with the traditional financial system. This makes them a natural medium for the flow of value between the two systems.

In this connector role, specific application scenarios supported by stablecoins include:

• Dual-ecological strategy for corporate treasury management: Companies can process daily operating funds in the traditional banking system, while deploying part of the liquidity to the DeFi protocol through stablecoins to obtain income

• Cross-ecological optimization path for funds: Build an intelligent system to automatically optimize the allocation of funds between TradFi and DeFi according to the market conditions of different ecosystems

• Compliance-packaged DeFi services: Access DeFi services in a compliant manner through stablecoin service providers with regulatory licenses to meet the access needs of institutional investors

Aiying found in her exchanges with the treasury departments of many companies in the Asia-Pacific region that this "day and night fund management" model is being adopted by more and more companies - even traditional companies are beginning to realize that deploying part of the liquidity funds to the DeFi field through stablecoins can create additional returns while maintaining the necessary risk control.

However, the construction of such scenarios needs to overcome several key challenges: the complexity of regulatory compliance (especially for regulated financial institutions), risk isolation mechanisms (ensuring that DeFi risks do not spread to core businesses), and simplified user experience (making it easy for non-crypto professionals to use). A successful solution needs to provide innovation in three dimensions: technology, regulation, and user experience.

Through in-depth analysis of these three core scenarios, we can clearly see that the value creation of stablecoins has far exceeded the simple concept of "digital dollar" and is moving towards building a complex, multi-dimensional application ecosystem. In this direction, the simple issuance capability is no longer a winning factor, but requires a deep understanding of specific scenario requirements, building an application ecosystem that integrates all parties, and providing a comprehensive ability to provide a frictionless user experience.

3. Differentiation of regulatory landscape: Hong Kong and Singapore’s forward-looking layout

The regulatory environment both shapes and reflects the direction of market evolution. By deeply analyzing the stablecoin regulatory strategies of Hong Kong and Singapore, two major financial centers in the Asia-Pacific region, we can more clearly grasp the trend of the value center of stablecoins shifting to scenario applications.

Hong Kong: Evolution from sandbox to mature framework

On May 21, 2024, the Hong Kong Legislative Council officially passed the Stablecoin Issuer Bill, which marked the transition of Hong Kong's stablecoin regulation from the exploratory stage to the mature framework stage. The core features of this regulation include:

• Layered regulatory framework: Differentiated regulatory requirements are designed for different types of stablecoins, and regulatory priority is given to payment-oriented single fiat currency-anchored stablecoins.

• Full-chain risk management: not only focusing on the issuance process, but also covering the entire ecological chain including custody, trading, payment processing, etc.

• Scenario-oriented regulatory incentives: Providing compliance convenience and policy support for application scenarios that serve the real economy

From the policy documents of the Hong Kong Monetary Authority and industry exchanges, we have noticed that Hong Kong's strategic focus has clearly shifted from "attracting stablecoin issuers" to "cultivating an innovative application ecosystem based on stablecoins." This shift is reflected in specific policies, such as providing regulatory clarity for corporate clients to use stablecoins for cross-border trade settlement, providing guidance for financial institutions to carry out stablecoin depository and exchange business, and supporting the interconnection of stablecoin payments with traditional payment systems.

There are unique strategic considerations behind Hong Kong's strategic positioning: as a gateway connecting mainland China and the international market, Hong Kong hopes to strengthen its strategic position in global offshore RMB business, cross-border financial services in the Greater Bay Area, and Asia's international asset management center through the construction of a stablecoin application ecosystem.

Singapore: A refined risk-adaptive framework

Compared with Hong Kong, the Monetary Authority of Singapore (MAS) has adopted a more sophisticated "risk-appropriate" regulatory strategy. In its framework, stablecoins are subdivided into multiple categories, each subject to different regulatory standards:

• Single Currency Stablecoin (SCS): A stablecoin that is anchored to a single fiat currency and is primarily used for payment purposes, subject to the most stringent reserve requirements and risk control standards

• Non-single-currency stablecoins: including stablecoins anchored to a basket of currencies or other assets, subject to differentiated regulatory requirements

• Scenario-adaptive regulation: Adjust the intensity of regulation according to the usage scenarios of stablecoins (such as retail payments, wholesale payments, transaction media, etc.)

It is worth noting that Singapore's regulatory strategy places special emphasis on the application value of stablecoins in cross-border payments, trade finance and capital markets. MAS has launched pilot projects for multiple stablecoin application scenarios, including Ubin+ (exploring cross-border stablecoin settlement), Guardian (tokenization and trading of sustainable financial assets) and Project Orchid (retail stablecoin payments). These projects all point to a common direction: the value of stablecoins lies not in the issuance itself, but in the application scenarios it supports.

Singapore's direction is consistent with its positioning as an international trade hub and financial center. By promoting the application of stablecoins in actual business scenarios, it will strengthen its strategic role in connecting global trade and financial flows.

Commonalities and implications of regulatory trends

Comparing the regulatory strategies of Hong Kong and Singapore, we can identify several key common trends:

• Regulatory shift from “risk prevention” to “innovation promotion”: Both local regulators have shifted from an initial cautious attitude to a more proactive approach to innovation.

• Emphasis on application scenario value: They all regard stablecoins as financial infrastructure rather than simple financial products, and focus on their value creation in actual application scenarios.

• Tilt allocation of regulatory resources: Tilt regulatory resources towards stablecoin applications that serve the real economy and solve practical problems

These regulatory trends further validate my core view: the value of the stablecoin ecosystem is migrating from the issuance stage to the application scenario. Regulators have realized this evolutionary direction and are guiding the market in this direction through policy design.

For market participants, this regulatory landscape means that competitive strategies that focus only on the issuance stage will face increasing limitations, while those participants who can innovate application scenarios and solve practical problems within the regulatory framework will receive more policy support and market opportunities.

4. Payment infrastructure that enables scenario innovation: from distribution to value creation

If scenario applications are the gold mine of value in the stablecoin ecosystem, then payment infrastructure is the necessary tool to mine these gold mines. As the market shifts from "who will issue the currency" to "who can create application scenarios", a key question emerges: what kind of infrastructure can truly enable rich and diverse application scenarios?

Through in-depth interviews and demand analysis with dozens of corporate clients around the world, Aiying found that the demand for stablecoin payment infrastructure by enterprises far exceeds the simple function of "sending and receiving stablecoins". What enterprises really need is a comprehensive solution that can solve five core challenges:

Five core challenges of enterprise-level stablecoin payments

• Complex multi-currency and multi-channel management: International companies often need to deal with 5-10 different fiat currencies and multiple stablecoins. They need a unified interface to integrate these complexities, rather than establishing independent processes for each currency.

• Opaque foreign exchange conversion costs: In cross-border transactions, hidden foreign exchange costs are often as high as 2-3% or even higher. Enterprises need tools that can monitor and optimize these conversion costs in real time.

• Multi-level compliance and risk control requirements: Transactions in different regions and of different sizes face different compliance requirements. Enterprises need a solution that can meet strict supervision without excessively increasing operational complexity.

• Integration barriers with existing systems: Any new payment solution must be able to integrate seamlessly with the company’s existing ERP, financial management and accounting systems, otherwise the cost of adoption will be too high

• Lack of programmable payment capabilities: Modern enterprises need more than simple fund transfers, including advanced features such as conditional payments, multi-level account splitting, and automatic payments based on event triggers.

Faced with these complex demands, the market is forming three distinct infrastructure provision models, each with a different strategic positioning and value proposition:

In-depth comparison of three stablecoin payment infrastructure models

After in-depth analysis of these three models, we believe that the "neutral platform" model has unique advantages in enabling multiple application scenarios, especially in three key aspects:

• Multi-ecological integration capabilities: No single stablecoin or payment channel can meet all scenario requirements. The neutral platform provides enterprises with maximum flexibility by integrating multiple stablecoins, multiple payment channels, and multiple fiat currency channels. This enables enterprises to choose the best combination according to the needs of different scenarios without being restricted by a single ecosystem.

• Cross-scenario intelligent optimization capability: The real value lies not in simply providing multiple options, but in being able to intelligently recommend the best path for a specific transaction. For example, a payment from Singapore to Brazil may require different optimal paths under different conditions: using USDC through a specific exchange during period A, using USDT through another channel during period B, or even falling back to traditional bank channels under certain circumstances. This dynamic optimization capability is the core of scenario value.

• Compliance empowerment capabilities: As stablecoin applications shift from simple transactions to broader business scenarios, the complexity of compliance requirements has increased significantly. By integrating various compliance tools and processes (such as KYB, transaction monitoring, suspicious activity reporting, etc.), the neutral platform reduces the cost and complexity of enterprises building their own compliance infrastructure, enabling them to innovate application scenarios under the premise of strict compliance.

In the long run, we foresee that the future stablecoin payment infrastructure will be further specialized, forming a clear layered architecture: stablecoin issuers focus on currency stability and reserve management; neutral payment infrastructure providers are responsible for connecting different stablecoins, optimizing payment paths and ensuring compliance; vertical industry solutions focus on in-depth applications in specific scenarios. This professional division of labor will significantly improve the efficiency and innovation capabilities of the entire ecosystem.

5. Future Outlook: The Integration and Evolution of Payment and Finance

Looking ahead to the future evolution of stablecoin application scenarios, we can identify a clear development trajectory: from a simple payment tool to a comprehensive financial infrastructure. This evolution will unfold in three stages, each of which represents a qualitative change in the value creation model.

The three-stage evolution of stablecoin application scenarios

Phase 1: Payment Optimization (2023-2025)

Currently, we are in the first stage of stablecoin application, and the core value proposition is to solve basic payment problems, especially cross-border payment scenarios. The characteristics of this stage include:

• Improve payment speed (from 3-5 days to real-time or near-real-time)

• Reduced apparent cost (from an average of 7% to 0.1%-1%)

• Enhanced payment transparency (real-time tracking of transaction status)

• Optimize foreign exchange processing (reduce losses from exchange rate fluctuations)

At this stage, stablecoins are mainly used as a medium for fund transmission, replacing or supplementing traditional payment channels. The competition among market participants focuses on who can provide a faster, cheaper and more reliable payment experience.

Phase 2: Financial Services Embedding (2025-2027)

As basic payment issues are resolved, stablecoin applications will enter the second phase, with the core feature being the deep integration of financial services and payments. This phase will see:

• Seamless integration of payments and trade finance (e.g. automatic provision of accounts receivable financing based on payment history)

• Embedding of liquidity management tools (such as intelligent fund pool management, optimization of idle fund returns)

• Programming of multi-party financial collaboration (such as collaborative automation among buyers, sellers, and financial institutions in supply chain finance)

• Real-time asset-liability management (the corporate treasury function shifts from delayed reporting to real-time management)

At this stage, stablecoins are no longer just payment tools, but become the infrastructure for building new financial services. The focus of competition has shifted from simple payment efficiency to who can provide more comprehensive and smarter financial solutions.

Phase 3: Financial Programming (2027 and Beyond)

Eventually, stablecoin applications will enter the third stage: financial programmability. In this stage, enterprises will be able to customize complex financial processes based on business logic through APIs and smart contracts. Specific manifestations include:

• Business rules are directly converted into financial logic (e.g. sales conditions are automatically converted into payment conditions)

• Dynamic optimization of financial resources (capital automatically flows between different channels and instruments based on real-time conditions)

• Automation of cross-organizational financial collaboration (programmed collaboration of financial systems of upstream and downstream enterprises in the supply chain)

• Democratization of financial innovation (companies can build proprietary financial tools and processes at low cost)

At this stage, stablecoins will become true "programmable currencies", and financial operations will no longer be independent functions, but will be deeply embedded in the core business processes of enterprises. The focus of competition will be on who can provide the most powerful and flexible financial programming capabilities.

VI. The Formation of a New Division of Labor System

This three-stage evolution will promote the stablecoin ecosystem to form a more professional division of labor system, which is mainly reflected in three aspects:

• Infrastructure layer: Stablecoin issuers focus on maintaining currency stability, reserve management, and regulatory compliance, providing a reliable value foundation for the entire ecosystem. Participants in this layer will face pressure for standardization and commoditization, and their differentiation space is limited.

• Application platform layer: Neutral payment infrastructure providers are responsible for connecting different stablecoins, optimizing payment paths, ensuring compliance, and providing core application functions. Participants at this layer will compete through differentiated technical capabilities, user experience, and ecological integration capabilities.

• Scenario solution layer: Vertical industry solution providers focus on deep optimization of specific scenarios and provide highly customized solutions. Participants in this layer will differentiate themselves through a deep understanding of specific industry pain points and targeted solutions.

As this professional division of labor deepens, we will see changes in the value distribution ratio of each layer: the profit space of the infrastructure layer will gradually shrink, while the application platform layer and scenario solution layer will gain a larger share of value. This trend is highly similar to the development of the Internet - from early infrastructure competition, to platform competition, and then to application scenario competition.

Conclusion: Whoever can create application scenarios will master the future of stablecoins

The stablecoin market is undergoing a profound value reconstruction: from "who will issue the currency" to "who can create and amplify real-world application scenarios". This is not a simple adjustment of the business model, but a redefinition of the way the entire industry creates value.

Looking back at the development history of payment technology, we can find a recurring pattern: every payment revolution has gone through a process from infrastructure construction to product standardization, and finally to the explosion of scenario value. Credit cards have evolved from a simple payment tool to the infrastructure for building a consumer finance ecosystem over decades; mobile payments have also experienced a long evolution from simply replacing cash to deeply integrating various life scenarios. Stablecoins are experiencing the same development trajectory, and we are now at a critical turning point from standardization to the explosion of scenario value.

In this new stage, the key to success is no longer who has the largest issuance volume or the strongest capital strength, but who can most deeply understand and solve practical problems in specific scenarios. Specifically, market participants need to have three core capabilities:

• Scenario insight: Ability to identify and understand the deep pain points and needs in specific areas

• Integration and coordination capabilities: Ability to connect and integrate multiple resources to build a complete solution ecosystem

• User empowerment: Ability to make complex technologies easy to adopt through appropriate abstraction and simplification

For participants in the stablecoin ecosystem, this value migration means a shift in strategic focus: from simply pursuing scale and speed to deepening vertical scenarios and user value. Participants who can establish professional division of labor, build an open ecosystem, and focus on scenario innovation will stand out in this transformation that reshapes the global payment infrastructure.

The article comes from the Internet:Scenario is king: Reconstruction of stablecoin competition landscape and migration of value focus