The once-unshakable dominance of Tether and Circle in the stablecoin market is showing signs of decline.
According to OnchainHQ’s Leon Waidmann, their combined market share has slipped from 91.6% in March 2024 to around 86% today. The shift is driven by yield.
As US Treasury bills yield over 4%, stablecoin holders are questioning why they earn nothing while issuers collect the profits. Entrepreneur Nic Carter also noted that the “stablecoin duopoly is ending.”
Circle, valued at $30.5 billion, and Tether, reportedly raising funds at a staggering $500 billion valuation, together represent about $245 billion in supply. Yet new challengers are quickly entering the scene.
Ethena’s USDe, designed to share crypto-basis trade yields, has grown to a $14.7 billion supply, while Maker’s rebranded Sky (formerly DAI) continues to evolve around yield-sharing.
Other entrants like Agora’s AUSD, Paxos’ USDG, and Ondo’s USDY are purpose-built for yield distribution, making them attractive alternatives to the older, yield-free models.
Stablecoins evolve as firms seek fair returns
The new generation of stablecoins represents a structural change in how digital dollars operate.
For years, intermediaries, exchanges, wallets, and fintech platforms have depended on Tether or Circle, allowing them to earn all the yield generated from user deposits.
This imbalance has prompted platforms to issue their own stablecoins or partner with new yield-sharing models.
For instance, exchanges are now offering “earn” programs where users receive part of the yield while the intermediary retains a small margin.
Ethena’s strategy of sharing returns from its crypto yield operations has set the tone for this emerging market.
The model is appealing enough that even fintech companies and wallets are quietly developing white-labeled stablecoins through services like Bridge or Anchorage.
GENIUS rule opens door for bank-backed stablecoins
The passage of the GENIUS regulation opened the door for traditional banks to issue their own stablecoins under strict compliance rules.
Major US institutions, including JPMorgan, Citigroup, and Wells Fargo, have reportedly discussed forming a consortium to enter the market.
Their participation could reshape the sector entirely, adding scale and credibility to a space currently dominated by crypto-native issuers.
Meanwhile, DeFi protocols are exploring similar ideas. Platforms like Hyperliquid are introducing native stablecoins to reduce reliance on USDC. While wallets such as Phantom are integrating embedded earn features tied to their own tokens.