1confirmation Newsletter - Issue #104
Stablecoins: Why Now and Stablecoin Native Apps
MakerDAO. Basis. Bridge. Over the past decade, we've backed stablecoin projects that failed, succeeded modestly, and achieved breakthrough success. These have all validated what we've believed for years: stablecoins represent one of crypto's first true product-market fit beyond speculation.
Context Matters
At 1confirmation, we've been betting on stablecoins since day one. Not because they were the hot shiny object, but because they showed signs of real world usage beyond pure speculation.
In 2017 we backed MakerDAO, a decentralized collateralized backed stablecoin that is still operational today. In 2018, we backed Basis, an algorithmic stablecoin, which ultimately shut down and returned investor money. Then in 2022, we invested in Bridge, which was acquired by Stripe for $1.1B and one of the largest crypto acquisitions to date..
One failed. One succeeded. One broke through. They all helped validate a thesis we’ve held for years: stablecoins are one of crypto’s first real use cases.
North Star:
We believe that total stablecoin supply onchain is the north star for crypto adoption. Today the market stands at $247B, surpassing its previous peak of $187B from May 2022. It's grown from 90% since the start of 2024.
This north star metric represents real crypto adoption and indicates if we are reaching net new users.
Why Now
From a macro perspective, stablecoins have become a strategic necessity for US economic dominance:
The Dollar Export Problem: Foreign central bank dollar reserves have dropped from 65% in 2015 to 57% today. BRICS nations and recent tariffs are accelerating de-dollarization. Stablecoins solve this by distributing dollars directly to people globally on the internet without requiring government buy-in.
The Treasury Buyer Solution: Tether now ranks as a top-20 buyer of US treasuries globally, more than Germany or Australia. As traditional buyers like Japan and China reduce holdings, stablecoin issuers are becoming crucial funding sources for US government operations.
Legislative Tailwinds: Incoming stablecoin legislation (Genius Act) will unlock major players like Bank of America and Meta to launch their own stablecoins, dramatically expanding the market.
Nick Tomaino explains the “Why Now”
Stablecoin-Native Apps
All of this macro context is interesting, but how do you actually make money? We believe we're about to see an explosion of stablecoin-native applications that go far beyond speculation.
Consumer Apps: Polymarket proved that stablecoin-native apps can achieve mainstream adoption, processing billions in volume while bringing truth and information to the world. This is just the beginning.
Emerging Markets: Crypto's promise has long been financial inclusion for the billions without bank accounts. Instead, we got speculation. Stablecoins are finally delivering on that original vision. We recently invested in Karsa, a stablecoin neobank for Pakistan and Nigeria, where 32% inflation makes dollar access crucial for financial stability. This isn't about making rich people richer, it's about giving financial tools to people who need them most.
Geographic Expansion: Currently 99.9% of stablecoins are USD-backed, but this will change. Over the next five years, expect significant growth in EUR, GBP, and other fiat-backed stablecoins as regulatory frameworks develop globally.
The Path Forward
Stablecoins represent crypto's clearest path to mainstream adoption. Unlike other crypto narratives driven by speculation, stablecoins solve real problems for real people today.
The macro tailwinds are stronger than ever. The technology is proven. The regulatory clarity is coming.
We're looking for founders who understand that the biggest opportunity is building stablecoin native applications that bring stablecoins to the next billion users.
Required reading / watching this week
Polymarket partners with X - x.com
It was announced last week that Polymarket will be the official prediction market for X.com. Skeptics expected Polymarket to fall off after the election, but the truth is they continue to grow in other areas outside of politics. This partnership is another example of Polymarket leveling up and bringing crypto mainstream.
“Real Friends Don’t Ask for Airdrops” - x.com
Brett Shear, the newest General Partner at 1confirmation, joins Not a Cartel podcast. He discusses his first few weeks at 1confirmation, the collector funnel strategy and all things crypto.
A New World - Worldcoin - youtube.com
Worldcoin had a keynote with founders Alex Bania and Sam Altman. They discuss a handful of product updates and partnerships. One of the most exciting things they discuss is bringing Orbs to the United States and mini orbs to everybody in the world.
Three Strategic Goals for Ethereum - ethereum.org
Ethereum has three main goals moving forward: scaling the L1, scaling the blobs, and improving UX. Much has been said about Ethereum over the last year or so, but in the last few months there has been a vibe shift.
Adam Hollander, CMO of OpenSea, wrote a great article on the OpenSea 2.0 release, rewards/token info and more. Lots to be excited about with OpenSea and $SEA.