Stability or Illusion? The Real Picture of the Stablecoin Market in 2025

The year 2025 marks the period of the most intense fluctuations in the history of stablecoins. From a “lifeline” amid inflation to a “money-burning engine” of high-risk projects, stablecoins are entering the most fiercely polarized moment. The explosive growth coupled with sudden crashes has likened this market to a game of “dancing on the edge of a knife.” Below is the overall picture of stablecoins in 2025 — the dark sides that are hidden, the real values that still exist, and the reasons why the race of “legalization or disappearance” has officially begun.

1. Stablecoin: From a Defensive Tool to the Flip Side of Instability Stablecoin is wearing two completely opposite faces. Stablecoin is a lifesaver in a hyperinflationary economy. In countries with uncontrolled economies, stablecoins are no longer an investment tool but rather a safeguard for assets: Argentina: Inflation over 200% causes workers to immediately convert their salaries into stablecoins to avoid losing wealth daily. Nigeria: Limited access to USD, high costs of international money transfers, businesses are shifting to use stablecoins for transactions. The transaction volume in Nigeria has risen to 22 billion USD just in 2024–2025, reflecting a survival need rather than speculation. But in the crypto market, stablecoins are full of hidden risks. Some stablecoins are advertised as “pegged to 1 USD”, but they: Devalued from 1 USD to 0.24 USD in just 24 hours, became a “paper stablecoin”, causing billions of USD in losses for investors, relying on complex models, high leverage, or opaque collateral. The harsh truth is: A stablecoin is only stable when it is built on a transparent foundation. Otherwise, it is a ticking time bomb.
2. Two Models of “High Stable Interest” That Will Cause Disaster in 2025 Most of the major losses in 2025 come from “high-interest” stablecoins, targeting users' preference for safe profit. (1) Ponzi-style Stablecoin: Raising new funds to cover old losses Some projects raised hundreds of millions of USD with the promise: “Stable interest rate of 10–20%” “Value always pegged to 1 USD” “Supported by a professional investment strategy” But in reality: Total raised capital: 160 million USD Engaging in “complex arbitrage” → Essentially leveraging 4 times + blind investment Result: burned out 93 million USD reserves Stablecoin collapsed by 76% in a few hours Projects using that token as collateral also collapsed, losing an additional 100 million USD These models are essentially Ponzi schemes that meet the textbook standards: High interest → Lack of transparency → Large leverage → Collapse in a chain. (2) Strategic Stablecoin: Sophisticated exterior, fragile inside like glass “Delta-neutral stablecoin” models are promoted with the formula: Buy spot → Short futures → Earn funding rate → Avoid price volatility But: Funding rate turns negative → No more income Exchange reduces liquidity → Hedge costs increase To maintain promised profits, the project must withdraw reserves to compensate → Imbalance The mechanism is no longer “neutral”, only “self-burning money” When market conditions change, “mathematical stability” collapses immediately. This is not a technical error — this is a model that cannot survive in the long term.
3. 2025: The Pivotal Year of Regulatory Tightening In July 2025, the US issued the largest legal framework for stablecoins to date. Key points: ✔ Recognize stablecoin as legal → But it must operate as part of the mainstream financial system. ✔ Interest-Bearing Ban on stablecoins ( → This is the strongest punch. Because if a stablecoin serves as both money and pays 4–6% interest, this will: Withdraw money from traditional banks Disrupt credit control Create unmanageable systemic risks Result: Interest-bearing stablecoins are dying right on American soil. A series of projects have to change their model or shut down. Stablecoins are forced to return to their true nature: “Means of payment, short-term store of value — not an investment product.” This tightening makes the market “cleaner”, eliminating a multitude of distorted versions.
4. Why is it Tightened But Stablecoin Still Explodes? Despite the increasing risks and stricter regulations, the demand for stablecoin continues to rise sharply, for the following reasons: ✔ We Solve Real Problems for Hundreds of Millions of People InflationRemittance costsInternational financial accessCross-border transactions In many countries, stablecoins are not an option but a matter of survival. ✔ Major Financial Institutions Have Changed Their Stance Visa launches a feature allowing global artists and freelancers to receive income in stablecoins. Stripe spends $1.1 billion to acquire a stablecoin infrastructure business. Stablecoins are integrated as a payment pipeline, not a speculative asset. Common point of these organizations: Don't follow “crypto faith”, but rather practical effectiveness. ✔ Stablecoin Has Become an Indispensable Infrastructure In 2024, the stablecoin volume will reach 27 trillion USD, surpassing both Visa + Mastercard. Stablecoin has become: Payment infrastructure Value storage tools Base layer for DeFi Part of global trade Although the risk models have been eliminated, the core demand remains sustainable.
5. Conclusion: The Era of “False Stability” is Over — Only Room for Transparency The stablecoin market in 2025 is facing a major cleansing. Lack of transparency in stablecoins → Collapse of stablecoins paying interest → Banned stablecoins relying on complex financial models → No longer viableOnly transparent stablecoins with real reserves, audited and legally compliant will survive long-term. Stablecoin is not a profit-making tool. Stablecoin is digital financial infrastructure. In the new era: “Either transparency, or disappear.”