In this keynote at Sonic Summit 2025, David Zhang traces the eight‑year evolution of stablecoins from niche, single‑digit‑million assets to a $300 billion market tightly linked to DeFi growth. He begins with his own experience founding Stably in 2017—one of the first fiat‑backed tokens on Binance and a pioneer of “stablecoin as a service”—and later launching DTrinity, a DeFi‑focused stablecoin designed for capital efficiency. Zhang explains why stablecoins are essential for settlement in crypto, defining settlement as the irrevocable transfer of value, and outlines how early tokenization (colored coins, OmniLayer) gave way to ERC‑20 proliferation. He highlights liquidity as the availability of counterparties and describes how decentralized exchanges, especially Curve, transformed liquidity provision from capital‑intensive market‑making to low‑cost, automated AMM pools, enabling stablecoins to become fungible on‑chain. This liquidity unlocked lending protocols, where rehypothecation allows a single stablecoin deposit to be used simultaneously for borrowing and trading, creating DeFi analogues of M1/M2 money aggregates and fostering composability (e.g., Yearn’s MIM loop). Zhang notes the shift from supply‑side incentive models—most projects rewarding holders—to DTrinity’s demand‑side approach that pays borrowers and liquidity providers to increase token velocity, arguing this yields higher capital efficiency. He surveys the current landscape of yield‑bearing stablecoins (Athena, Frax, Sky) and observes that while supply‑side projects dominate, demand‑side incentives are emerging. Finally, Zhang offers a contrarian long‑term view: as fiat’s role diminishes, stablecoins tied to fiat may eventually “die,” yet the still‑small share of crypto in global money supply suggests massive upside, leading him to predict a $30 trillion stablecoin market cap before fiat is fully supplanted. The talk ends with a bold, forward‑looking perspective on stablecoins’ role in the evolving financial ecosystem.
Chapters
Next up, we'll be digging into the evolution of stablecoins in DeFi. I feel like everything has been about stablecoins right now, right? So let's hear a little bit more about it. Let's welcome to the stage Mr. David Jung. Stage is all yours.
You know, it's very funny. I used to give talks about stablecoins and people just wouldn't care. But at, you know, ever since the start of this year, now when I talk about stablecoins, people actually listen. So personally, I love this narrative. But first, a little bit about myself. So I've been in this space since 2017. So for those of you who have been around for that long, pretty much the only stablecoin that was viable during that time was USDT. And my first stablecoin project, which is still around today, is called Stably.. And we wanted to make stablecoins more accessible for everyday people. We wanted to make it redeemable straight into your bank account. And this was the pre-Circle days, so this was still very novel. And we eventually did realize that vision. So we were one of the first 5 stablecoins on Binance. We fought in the first wave of stablecoin wars. We pioneered what is now known as stablecoin as a service. And I'll dig into why that's relevant later. I have another stablecoin project as well called Dtrinity. This one is more in the DeFi space. So at Dtrinity, we make stablecoins more capital efficient to use in DeFi. And I'll connect all these things together. But all of this is to just give a little bit of context. So I've been on the Web2 side. I've been on the Web3 side. But before we dig too much into the detail, let's zoom out a bit and just appreciate how far we've come, right? So when I first got started in this space, stablecoins were in the single millions, and now we're all the way up to almost $300 billion today. And if we compare stablecoin TVL to the broader DeFi TVL, we can see that they're actually very correlated, right? So As this ecosystem grows, stablecoins tend to grow with it. But when the ecosystem goes back down, stablecoins tend to be a lot stickier. And the question, of course, is why. So we're gonna talk about why crypto needs stablecoins. I'm sure you all intuitively understand this, but let's just make it explicit. So first of all, just so we're all on the same page, what is settlement? So settlement I will define as the final irrevocable transfer of value between parties that distinguishes a financial obligation. So, you know, that's fancy speak for, you know, we make a transaction, at what point can we stop caring about each other, right? And in the very early days of crypto, for those of you that remember, Bitcoin was how people settled transactions on-chain, right? So like, who here remembers, you know, going on crypto exchanges and seeing all the pairs against BTC, right? So those were the very early days. And it wasn't until tokenization that we started to have an alternative, right? So very early examples of tokenization, like colored coins on Bitcoin or OmniLayer, which, you know, many people don't know, but Tether actually got their start on OmniLayer. But it wasn't until Ethereum and ERC-20s that the tokenization boom really started to take off. So we started to see a much more diverse stablecoin landscape. So there you see Stably up there. We were one of the first pioneers in the fiat-backed space. But very quickly, the space grew. And as more stablecoins launched, liquidity also became very fragmented. So first of all, what is liquidity? So I define liquidity as the availability and quantity of counterparties ready to engage in settlement. So what does that mean? That means someone has to be willing to take the other side of the trade. And in the very early days, these were mostly market makers or local Bitcoin style, like peer-to-peer. So really it was only professionals or like people who were very enthusiastic about the space that were providing this liquidity. So in order for stablecoins to truly take off, there needed to be a more passive way for stablecoins to be liquid on-chain. So that's where the decentralized exchange comes in. So here's some early DEXs. In the interest of time, I'm not gonna talk about them. So we'll skip to Curve. So Curve to me is like the granddaddy of stablecoin DeFi, right? Before Curve, you know, there was like general DeFi, but after Curve, Now all of a sudden people are thinking about DeFi that's tailor-made for a specific use case. And Curve really enabled stablecoins to become fungible on-chain. Right. So in a pre-Curve world, it was very capital intensive to make markets, provide liquidity. Like we experienced this ourselves with our original stablecoin called USDS. We were market making on Binance. It was costing us millions in liquid capital. And we were losing tons of money just in user acquisition. But once protocols like Curve came out, all of a sudden it became very capital efficient and sometimes even profitable to provide liquidity for your users. And that liquidity unlocked the next big use case in stablecoins, which is lending. So some of the early lending protocols that are still around today, you know, they have different mechanisms and different risk profiles, but they mostly solve the same set of issues, right? You can use them for leverage, you can use them for tax advantages, you can use them to get spending money, whatever. But the way that they enable this is that they enable stablecoins to be even more useful than they were before. So what do I mean by that? When you deposit a stablecoin onto a lending protocol and then someone else borrows it and swaps it on a DEX, that stablecoin is now being used in two different places, right? And this is called rehypothecation. So now in the DeFi space, we suddenly have, you know, like M1 and M2, very similar to the traditional financial markets, right? And this opens up whole new levels of capital efficiency that were not possible before. And this really enters us into the era of composability. So Yearn or Y-Earn is probably the poster child of early DeFi composability. I'm sure many people remember the Y-Earn MIM loop, right? And actually, this was early foreshadowing of something that would later, you know, drive the stablecoin boom today, which is the realization that stablecoins are not just, you know, a way to track fiat assets. But it's actually a way for you to productize certain value in your ecosystem as well. So what do I mean by that? So today there is a huge variety of stablecoins if you compare it to even just 2 years ago, right? And I would say one of the big players that's responsible for driving this shift is Athena. So Athena really changed the narrative on stablecoins.. And now people see stablecoins as not just a way to, you know, hold money and maintain a peg to USD, but also as a way to generate yield in new and novel ways and distribute it to users. So a lot of yield-bearing stablecoins have come up over the past, you know, 12 to 18 months or so. So you have, you know, new yield-bearing strategies like Athena's basis trade. You have legacy players like Sky, Frax, stuff like that. So what we noticed is there's a lot of supply-side stablecoin projects, but there were actually no demand-side stablecoin projects. So what do I mean by that, right? Everyone on this chart is incentivizing you to hold their stablecoin and to grow the TVL of their stablecoin. But at DTrinity, what we decided to do was, incentivize the other side of the equation, which is the demand side. So we actually pay people who increase the velocity of our stablecoin in DeFi. So for example, we incentivize borrowers on lending protocols, we incentivize LPs on DEXs, and this actually makes the stablecoin much more capital efficient compared to incentivizing the supply side. So I don't think, you know, we've completely cracked the code and, you know, solved the last useful use case for stablecoins or anything like that. I think we will continue to see new innovations come out of the space. We'll continue to see new types of stablecoins. So really the natural question is what comes next, right? So, you know, the stablecoin space has come a long way in the past, you know, 8 years or so. You know, what does me, a guy who's been in the space for so long, think about the future? Well, I think that in the long run, stablecoins are going to die. So you might be asking, OK, you know, why can you talk so positively about stablecoins and at the same time think that stablecoins are going to die? Right. So all of this ties back to what stablecoins are pegged to, which is fiat currency. Right. I will define fiat currency as a utility token representing membership in an economic system where governments mandate its use and guarantee its acceptance. So, you know, it's not a shitcoin, right? It's a coin that has utility in the government ecosystem. And I don't think governments are gonna go away, but I think the role of fiat is gonna decline over time. So this chart shows cash and cash equivalents versus other types of productive assets. And we see that cash is trending down over time. So despite all this, why am I bullish on stablecoins? Right. Well, here is a chart of crypto market cap versus traditional market cap. And you can see that crypto is slowly starting to eat traditional finance's lunch. But actually, if you notice, the Y-axis here is on a log scale, right? Really, this is what crypto versus traditional markets looks like. So crypto on the very bottom left there is barely 0.3%. And if we look at stablecoins versus M2 money supply, similar picture, less than 1%. So all that's to say, even though I think the role of fiat will go down over time, we're still a long ways away from saturation. So between here and there, my bold prediction is stablecoin market cap $30 trillion. And I am out of time. So thank you for coming to my TED Talk.
