Inside Ethereum’s hidden liquidity imbalance that can break its economic model
2025-07-06 12:13:51
Main Idea
Ethereum faces a liquidity imbalance as stablecoin growth on its network outpaces its native ETH market value, raising concerns about its economic model and proof-of-stake system.
Key Points
1. Ethereum hosts over $127 billion in stablecoins, with Tether (USDT) accounting for more than 50% of that amount.
2. Stablecoin supply on Ethereum surged by $17 billion in six months, while ETH's market cap dropped from $400 billion to $304 billion.
3. JPMorgan projects the stablecoin market could reach $500 billion by 2028, potentially deepening Ethereum's role as a settlement layer.
4. ETH-denominated DeFi volume has declined to $6.8 billion from $30 billion, indicating a shift toward stable, externally governed assets.
5. The growing gap between stablecoin liquidity and ETH's market value may weaken Ethereum's proof-of-stake system and its economic model.
Description
When stablecoins call the shots, Ethereum’s decentralization becomes structurally compromised.
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