An on-chain breakout of the Russian oil trade

Today, relevant media reported that when Russia used Bitcoin, Ethereum and USDT in trade with China and India, the first batch of oil trade settlements were completed.

Since Russia was subjected to comprehensive sanctions by the West in 2022, the traditional dollar settlement channel has been cut off, and the switch to cryptocurrencies has been a helpless move, but it has unexpectedly opened up a new path.

As "digital gold", Bitcoin is censorship-resistant, decentralized, and suitable for large-value settlements and long-term stores of value.

With the flexibility of smart contracts, Ethereum can embed trade terms (e.g., automatic payments, conditional triggers) to reduce the cost of trust.

USDT acts as a volatility buffer to ensure the stability of instant settlement of transactions, and its global liquidity and compliance endorsement (e.g., Tether holds a large number of U.S. bonds) further strengthens its utility.

In this way, there is a clear logic behind the choice of BTC, ETH and USDT.

But this model is essentially a direct challenge to the hegemony of the dollar. Traditional oil trade is anchored to the US dollar, while Russia's attempts at crypto settlements are accelerating the process of "de-dollarization". If the BRICS alliance (such as India and China) follows suit, it may form a regional crypto settlement network and weaken the monopoly of the SWIFT system.

Compared with the traditional financial market in the short term, the demand for the US dollar may decline due to the diversion of trade settlements, coupled with the expectation of interest rate cuts by the Federal Reserve, the US dollar index (DXY) is facing downward pressure.

If the scale of oil crypto settlement expands, the pricing mechanism of traditional futures markets (such as Brent crude oil) may be partially replaced by on-chain derivatives (such as bitcoin-collateralized oil contracts), promoting the linkage between commodities and crypto assets.

And in the long term, the rise of sovereign crypto reserves will reshape global balance sheets. For example, if Russia converts its oil revenues into BTC reserves, it could lead to other countries following suit, or even giving rise to a "national HODL strategy"35. Once this trend is formed, Bitcoin's scarcity (21 million cap) will make it a strategic asset comparable to gold, further driving up institutional allocation.

For the crypto market, Russia's move is both a catalyst and a stress test, and the oil trade needs large-scale liquidity support, which directly stimulates the buying of BTC and ETH. According to Bernstein's predictions, the total crypto market capitalization could reach $7.5 trillion in 2025, of which Bitcoin accounts for 40%1. Institutional investors are likely to accelerate their entry, pushing BTC towards its $130,000 target.

The penetration of USDT in cross-border payments has upgraded it from a medium of exchange to a "settlement currency". Tether's issuance has exceeded 59.8 billion, and if the scale of oil trade expands, its function as an "on-chain dollar" will be more stable, and may even force the United States to speed up stablecoin legislation.

On-chain settlement of oil trade requires more complex financial instruments (e.g., collateralized lending, interest rate swaps), facilitating the integration of decentralized protocols with real-world assets (RWAs), which will also accelerate the integration of DeFi and RWA.

Despite the bright future, the potential risks cannot be ignored, and the United States may use "threats to financial security" as an excuse to increase scrutiny of stablecoin issuers (such as Tether) and even restrict wallet addresses linked to Russia.

The fluctuation of gas fees on the Ethereum network under high-frequency trading and the Bitcoin block capacity limit may force Russia to turn to Layer 2 solutions (such as Stacks, Babylon) or cross-chain protocols (such as LayerZero), but the technical maturity still needs to be verified.

Moreover, if Russia concentrates on selling crypto assets in exchange for fiat currency, it may trigger a sharp price shock, and retail investors may become "receivers".

Russia's crypto oil trade may be writing a historical playbook similar to the "petrodollar". In the 70s of the 20th century, the dollar was tied to oil and established its hegemonic position; Now, the combination of cryptocurrencies and energy trade may give rise to a new "oil-crypto" system. If this model is adopted by more resource-based countries, cryptocurrencies will transform from speculative symbols into the infrastructure of the global economy.

History will decide whether cryptocurrencies will be the "new gold" of the 21st century or a temporary tool to stop at geopolitical games.

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