Corollary: All stablecoin issuers are overvalued, while money transmission and businesses that have to internally settle money are undervalued* *To the extent that future costs will fall or services improve; most do many, many things besides transmit money or offer transaction accounts.

Stablecoins are like DeFi protocols now and e-mail 25 years ago. The long run value will accrue to those who use them as inputs, not those that developed them. The trick for stable issuers is not to invent today’s e-mail. It’s to invent today’s Gmail or other finished product

This is where banks, fintech, money transmitters, payment processors, etc have an advantage. They *have* a finished product w a well-defined market of end users. Moving away from slow/expensive inputs to those products and towards stables can be accretive quickly at the margins

This should be fairly obvious when you consider Circle’s poor overall profitability, Paxos’ sharing 100% of interest income on platforms using USDG, Maker’s inability to grow supply despite going far out on the risk curve. Tether alone has promising financials.

Tether has managed to fall into USDT being a product in that it’s a substitute for USD-denominated bank accounts in emerging markets. Curiously, no major stable issuer has seriously tried to compete with them.

The race is on for stable issuers to transition from being a commoditized product - easily replaced by a more reputable JPMcoin or HSBCcoin - with low switching costs into a sticky product that has some kind of moat other than offering 10bps more yield than the next guy.

@jonnythefrog1 @SkyEcosystem This would, of course, be different if Stars had to provide junior capital. But they don’t in practice at the moment.