The market for stablecoins has clearly entered uncharted waters, crossing the $250 billion mark in total supply for the first time in its history. This moment highlights the contrast with only two years ago when the landscape was not nearly as inviting for this particular sector of the cryptocurrency space. The transformation’s essence is a heightened demand for yield-bearing stablecoins, a broadened issuer base, and a tighter integration with both centralized exchanges (CEXs) and decentralized finance (DeFi) systems across the many different blockchain networks. The transformation’s essence is a heightened demand for yield-bearing stablecoins, a broadened issuer base, and a tighter integration with both centralized exchanges (CEXs) and decentralized finance (DeFi) systems across the many different blockchain networks. The market is evolutionarily moving beyond its reliance on just a few key players and the dominance of USD-pegged stablecoins, hinting at a more vibrant future. 2/ Stablecoin supply on Base has held steady, while Arbitrum is showing early signs of a rebound. $USDC and $USDT continue to dominate on both chains. pic.twitter.com/dCHY11Vwtv — Blockworks Research (@blockworksres) June 19, 2025 Yield-Bearing Stablecoins and Issuer Diversity on the Rise 2025 shows a trend that’s beyond any doubt: the burgeoning emergence of yield-bearing stablecoins. One of the most interesting newcomers is Ethena, which in a very short span of time has managed to garner an impressive supply figure of almost $6 billion since its launch. And that supply figure is obviously no indication of slowing demand; if anything, it’s quite the opposite. Stablecoin supply has passed $250 billion for the first time. • Yield-bearing stablecoins are growing fast. Ethena has grown to nearly $6 billion since launch. • Tether and Circle still dominate, holding a combined 86% of outstanding supply. • Issuer diversity is increasing.… pic.twitter.com/mrokz8u4OL — Delphi Digital (@Delphi_Digital) June 18, 2025 Even with these new entrants, the traditional issuers still have a chokehold on the overall market. Tether (USDT) and Circle (USDC) have a combined 86% of the total stablecoin market. Still, there are now at least ten stablecoins with over $100 million in circulation, meaning there is a far wider choice of issuers, a greatly reduced risk of stablecoin monopoly, and a much more competitive stablecoin hat market. Now, perhaps the single most significant aspect for us to consider is that over $120 billion in U.S. Treasuries are now locked inside stablecoins. This reflects the role of stablecoins as a liquidity sink that operates mostly outside the traditional financial markets—affording us some new opportunities and some new systemic considerations. Chain-Specific Trends: Arbitrum and Base Take Diverging Paths Stablecoin distribution and usage across Layer 2 chains is changing. Base, Coinbase’s L2, has stablecoin supply levels that are consistently stable. Arbitrum, however, is starting to come back after a to-the-top stall. Both ecosystems are reliant on USDC and Tether (USDT), which is where the stablechain activity appears to be. Nevertheless, if one were to take a more nuanced glance, they would see that differing dynamics are at play. On Arbitrum, significant growth has been achieved over the past three months by stablecoins like BUIDL and USDC, even while the supply of USDT has dropped dramatically. Base, by comparison, is not seeing the same kind of pronounced growth in non-USD paired stablecoins. Thus, on the surface, one might be tempted to view Arbitrum as the more accomplished protocol. However, it’s quite the opposite. Discrepancies also arise in the holding patterns of stablecoins. On Base, a large portion is parked within centralized exchanges — especially Coinbase — suggesting a more custodial-heavy user base. Arbitrum, on the other hand, holds a more decentralized profile, with most stablecoins flowing into DeFi. @HyperliquidX is Arbitrum’s largest holder, representing the most decentralized part of the ecosystem and a key driver of liquidity. Yet Base seems to be a far more stable environment. DeFi Powerhouses and Changing Lending Patterns As stablecoins continue to embed themselves in DeFi, key players are reshaping how value flows across networks. On Arbitrum, HyperliquidX stays the course, powering a wide range of DeFi activity and driving steady transfer volumes throughout 2024 and into 2025 — primarily via USDC and USDT. On Base, a rising star is Morpho Labs. It is leading the growth of stablecoins in DeFi lending. Use of the lending platform has surged, while Arbitrum’s main traditional lending protocol, AAVE, has seen its use sharply decline over the past month. Divergence also emerges when it comes to the fiat they transact with. Almost all of Arbitrum’s on-chain activity is USD-denominated. Base doesn’t have a huge amount of on-chain activity yet, but a substantial portion of what is happening seems to be in Euron, thanks to EURC, a token that is essentially an ERC-20 Euro. The same holds for the centralized exchanges. Arbitrum and Base are both sending substantial amounts of stablecoins to Binance. This is no small thing, and it indicates that the on-chain activity of both these networks is linked in a significant way to the trading that happens on these centralized exchanges. Conclusion: A More Complex, Liquid, and Multi-Faceted Market The 2025 stablecoin market is a creature very different from the simple structures of 2022. Its supply has crossed the $250 billion threshold, its issuers have diversified like never before, and products that were unimaginable just a few years ago—like yield-bearing stablecoins—are now part of the game. All of this makes the market ripe for disruption. Concurrently, usage pattern disparities at the network level—between Base’s centralized assets and its engagement with the USD, and Arbitrum’s DeFi-first, dollar-centric approach—illuminate the fact that this space is no longer a one-size-fits-all market. As stablecoins continue to reconfigure—and, in some cases, liquefy—Web3’s financial architecture, the industry appears to be entering its most mature, multifaceted, and inflation-safeguarded phase yet. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. 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