A breakdown of competing interests — from users to issuers — and how they influence what ‘good’ really means.
1.0 Abstract.
Hi. I’m mad writing this.
But that is a “good” thing, because this familiar emotion of mine has once again illuminated a nuanced side of reality I hadn’t been paying attention to before.
This stuff i’m writing could have alternatively been named;
Who Defines a ‘Good’ Stablecoin?
Exploring how users, regulators, protocols, and markets shape the value and success of stablecoins.
Or even
What Makes a Stablecoin “Good”?
An exploration of the different stakeholders stablecoins serve — and who ultimately gets to define their success.
This is because “Good’’, my friend, isnt an inherent value. For now, let’s set that aside and keep going.
“Is something good because God commands it, or does God command it because it is good?”
— The Euthyphro Dilemma (by Plato)
This comes from Plato’s dialogue Euthyphro, where Socrates asks whether the gods love the pious because it is pious, or whether it is pious because the gods love it.
In other words, is what we call a “good” stablecoin good because it is inherently good, or because the most powerful competing interest has declared it “good”?
You see, my friend, your values, beliefs — everything that makes you you — were influenced by one, two, or more competing interests. The ones that won are the ones you’ve currently adopted. What you see as good or bad isn’t rooted in an inherent state, but in a perceived state — and that perception was shaped by something or someone, whatever it or they may be.
You could argue that some things are inherently good or bad. But even those closest to being truly good or bad are layered with countless shades of grey. For example, what do you think is absolutely good in every sense?
To me, it would be ending world poverty. But if you start peeling back the layers of what a world without poverty looks like — what grey areas do you begin to see?
- Sharing Wealth vs. Freedom
How we end poverty matters. If it’s by taking from the rich to give to the poor, some might feel that’s unfair or that it kills motivation to work hard.
Would forcing people to share their wealth create anger, laziness, or new kinds of power struggles? - What Counts as Poverty?
Does ending poverty mean no one is starving — or does it mean everyone has the same level of wealth?
If basic needs are met but big gaps still exist, can that truly be called the end of poverty - Culture and Beliefs
In some cultures, living simply or having less is seen as a good thing — spiritual or humble.
If we push to end poverty everywhere, could we also be wiping out traditions that value a simple life? - The Planet’s Limits
If we lift everyone out of poverty by giving them middle-class lifestyles, what happens to the Earth?
More factories, cars, and consumption could damage the environment and create new problems. - Purpose and Motivation
If no one struggles anymore, what pushes people to grow or try?
Could a world without hardship become boring, aimless, or even depressing for some - Who’s in Charge?
Who decides what “no more poverty” looks like?
If powerful groups design that world, are they really helping — or just gaining more control over people’s lives?
These grey areas were generated by my friend ChatGPT, by the way. You could ask it to find the grey areas in your “absolute good” as well. Moving on, just as the idea of what it means to “end poverty” shifts depending on values, culture, and perspective, so too does the notion of what makes a stablecoin “good.” In both cases, “goodness” is not fixed or universal — it changes based on who holds the power to define it, what interests are prioritized, and the context in which it operates.
Understanding this fluidity is key to unpacking the competing forces that shape stablecoins and their perceived success.
“Morality, like art, means drawing a line someplace.”
- Oscar Wilde (Writer and wit)
2.0 Background Of This Stuff I’m Writing.
Okay, this is where we discuss the known and unknown knowns of stablecoins.
Stablecoins have become a foundational layer of the beloved crypto economy, offering a bridge between the infamous volatility of cryptocurrencies and the relative stability of fiat currencies.
Stablecoins as the name implies are designed to maintain a stable value — typically by being pegged to a reserve asset like the U.S. dollar — and they are typically used for trading, payments, lending, savings, remittances, and increasingly, for powering on-chain financial infrastructure.
But beyond all of these, the designs and the use cases, an essential question remains: What makes a stablecoin “good”? Is it price stability alone? Is it deep liquidity, regulatory compliance, decentralization, or trust in its issuer? As the stablecoin ecosystem evolves, and even increasingly now as institutions are giving it the stamp of recognition, this question has grown more complex, not less.
We have already established the arguable fact that the term “good” is deceptively simple. It implies objective quality, but in reality, it is knitted with subjectivity and context. What one user sees as “good” because of low fees and fast settlement, another might distrust due to lack of transparency. A regulator might define “good” as fully backed and compliant, while a DeFi protocol might value composability and decentralization. In other words, the perceived goodness of a stablecoin depends on who is looking, what their interests are, and what trade-offs they are willing to tolerate.
This study begins by acknowledging that there is no single universal definition of a “good” stablecoin. Instead, it investigates the stakeholders, standards, ideologies, and power structures that shape this perception. By examining the various ways “goodness” is defined, imposed, and sometimes manipulated, we can better understand the real dynamics behind which stablecoins thrive — and why.
3.0 Introduction To The Main Course.
Who Gets to Say a Stablecoin Is “Good”?
An analysis of perspectives, reports, and narratives shaping stablecoin legitimacy.
Like everything, Stablecoins live in a dynamic and often conflicting ecosystem — made up of users, builders, regulators, investors, and ideologues — each with their own version of what a “good” stablecoin should be like. And like all things shaped by human perception, this definition isn’t neutral, there are influences shaping the definition. The obvious key influences are incentives (the king), narratives, and sometimes, even power plays.
This section unpacks the key stakeholders influencing how we define and rank stablecoins, the reports that back their worldviews, and the ongoing tension between functionality, philosophy, and control.
➤ Users: Stability and Usability First
The everyday users of course comes first — traders, savers, remittance senders — and one thing they all have in common is that they don’t care about protocol governance models, attestation reports or blockchain alliances. They care about one thing, whether it works. Does it hold its peg? Can they move money fast and cheap? Is it everywhere they need it to be?
CoinGecko’s 2023 Stablecoins Report shared a survey by Blockchain Research Lab showing that 75% of crypto holders own stablecoins. Most of them (65%) keep only a small portion — up to 25% — of their portfolio in stablecoins. The most popular ones were USDT (owned by 80%), USDC, and BUSD (both at 50%). USDT stood out because of its huge liquidity and usefulness in trading. Overall, the data shows that users care most about stablecoins being reliable and cheap to use, even if they’re not fully decentralized.
A 2024 survey by Pew Research Center backs this up — 63% of U.S. adults said they don’t trust the safety or reliability of cryptocurrencies. That shows just how important reliability is to people. For example, when USDC briefly lost its peg in March 2023 because of its ties to Silicon Valley Bank, trust dropped fast. So, for users. Their perception of a “good” stablecoin is shaped by simple outcomes: no surprises, no frozen funds, no headaches.
➤ Issuers and Protocol Creators: Design, Narrative, and Survival
Issuers — from centralized players like Circle and newer entrants like Paxos’s Global Dollar (USDG), to decentralized protocols such as MakerDAO — often walk a tightrope. Some prioritize regulatory friendliness (Circle is seeking a U.S. banking license, and Paxos issues USDG under Singapore’s MAS framework), while others lean into ideology (MakerDAO’s censorship-resistant DAI). So, their idea of “good” depends on what they’re optimizing for: adoption, resilience, legitimacy, or survival.
Tether processed over $1.3 trillion in 2024 — not because it was the most transparent, but because it was early, liquid, and everywhere. Paxos, on the other hand, has issued and redeemed over $120 billion in USD-denominated stablecoins — including USDP, PYUSD, and USDG — under strict regulatory compliance as of late 2023, and this shows its capacity to scale within institutional boundaries.
Then there are the decentralized idealists.
MakerDAO’s DAI, for example, is created when users lock up crypto collateral (like ETH or WBTC) to mint a dollar-pegged token. It’s governed by the Maker community through on-chain votes and has been a DeFi staple since 2017. In early 2024 alone, DAI’s supply surged past $5.4 billion, and its monthly on-chain volume reached $637 billion — making it one of the most actively used stablecoins in the ecosystem.
But DAI is not alone. Other decentralized, censorship-resistant stablecoins include:
Frax (FRAX): A hybrid design that combines crypto collateral and algorithmic mechanisms. It walks the line between pragmatism and decentralization, appealing to those who want to reduce reliance on fiat-backed reserves.
sUSD (by Synthetix): Fully backed by SNX collateral and native to a synthetic asset platform, sUSD resists censorship and is deeply integrated in DeFi trading.
LUSD (by Liquity): Over-collateralized entirely with ETH and built without a governance token, LUSD maximizes immutability and neutrality.
RAI (by Reflexer): A non-pegged, algorithmically stabilized asset that attempts to preserve decentralization by avoiding USD backing altogether. It’s not “stable” in the traditional sense — but that’s the point, lmao.
Each of these alternatives offers a different interpretation of what “good” looks like in a decentralized context. So while they may lack the scale of centralized stablecoins, they make up for it with philosophical consistency, protocol autonomy, and resistance to external control.
➤ Regulators and Policymakers: Good = Controllable
To regulators, a “good” stablecoin is one that doesn’t blow up — or, I dare say, threaten their precious, meticulously crafted financial system. It must be fully backed, regularly audited, and trackable or easy to understand. And understandable, to be fair, because Terra’s 2022 collapse shifted the entire narrative: algorithmic stability without reserves was no longer acceptable.
The EU’s MiCA framework (2024) now mandates real-time auditing and strict reserve requirements for stablecoin issuers.
In the U.S., the GENIUS Act — passed by the Senate in 2025 — also reinforces this stance, requiring payment stablecoins to be fully backed by high-quality liquid assets, with regular disclosures and federal oversight.
What regulators now see as “good” — full audits, cash backing, and redemption guarantees — can conflict with what the crypto community values most: decentralization, user privacy, and innovation. The result is a tension between systemic safety and freedom in the crypto space.
➤ DeFi Builders: Give Us Predictable, Uncensorable Money
For protocols like Aave (lending), Curve (stablecoin trading), and Uniswap (decentralized exchange), a good stablecoin is one that doesn’t break or complicate the system. Stablecoins are one of the foundational layers of decentralized finance — providing stability, liquidity, and integration ease.
So its only natural that these platforms rely on assets that stay pegged, don’t get frozen due to centralized control, and integrate seamlessly with Ethereum-based smart contracts or their native contracts if needed.
A 2024 Messari report noted that 90% of DeFi Total Value Locked (TVL) depends on just three stablecoins: USDT, USDC, and DAI — a trend that continues into 2025 due to their deep liquidity and protocol-level utility (CoinGecko — State of Stablecoins 2024).
Why DAI and USDC Are Favorites
DAI, issued by MakerDAO, is a decentralized stablecoin collateralized by crypto assets like ETH and wBTC. Its trustless nature aligns with DeFi’s ethos, making it a go-to choice for protocols that value censorship resistance and decentralization. DAI’s ERC-20 compatibility makes it easy to plug into DeFi applications, though it has occasionally struggled with peg volatility and this has been mitigated through governance tools like the stability fee and debt ceilings.
USDC, issued by Circle, is a centralized stablecoin backed 1:1 with U.S. dollars and other high-quality liquid assets. Its strong regulatory compliance and transparent reserve disclosures make it highly attractive for DeFi builders, especially in platforms like Curve and Uniswap. In 2024, USDC accounted for over 70% of on-chain transfer volume, according to CryptoSlate, cementing its role as the default stablecoin for high-volume trades and liquidity pools.
USDT’s Role and Controversies
Tether (USDT), with a market cap of $114.4 billion in 2024, remains the largest stablecoin by far. Its massive liquidity and early mover advantage have made it widely adopted across exchanges and markets. However, USDT faces ongoing scrutiny over the transparency of its reserves. Despite repeated assurances and partial audits, doubts remain — especially after past depegging scares and regulatory investigations. And i think these concerns make USDT less favored in some DeFi circles, particularly among protocols that prioritize transparency and decentralized governance, like those backing DAI or USDC.
➤ Investors, Degens, Tradoorsss: Liquidity Is King
Ah, I know this one all too well, or more precisely, the lack of it. *cries* Liquidity is king in the most literal sense of the word. And that’s why, traders, and capital allocators love stablecoins that are optimized for speed and are central to market-making liquidity. We — no, they — yes, they care less about decentralization and more about uptime, trading volume, and yield.
To them, a good stablecoin is one that basically never sleeps, never slips off its peg, and is always available in size across every major exchange.
And this is why Tether’s $100B daily trading volume (2025) secures its throne, even while transparency concerns linger.
4.0 Power Narratives: So, Who decides?
The fight over “good” isn’t a technical debate. The thing is, just like everything today, the fight is a political one. Centralized issuers define goodness with audits and press releases. Regulators define it with legal frameworks. Users define it with usage. And DeFi builders and investors just want something that doesn’t blow up their protocol and their investments respectively.
And trust me, the loudest voices often win — not because they’re right, but because they control the distribution of trust.
4.1 Some of The Key Reports Driving This “good stablecoin” Definition War:
NYAG vs Tether (2021) — Put Tether’s opaque reserves in the spotlight./p>
FATF 2023 Report — Pushed AML/KYC compliance into the global conversation./p>
Messari 2024 DeFi Report — Showed just how central stablecoins are to DeFi’s functioning./p>
EU MiCA Framework (2024) — Redrew the lines for what counts as a “legitimate” stablecoin in Europe./p>
➤ So, Again Who Wins?
Is it the users? The issuers and protocol creators? Regulators and policymakers? DeFi builders? Or the investors?
Well, think about it, no single group owns the definition of a “good” stablecoin. Instead, and this is important, it’s a constant, never ending, always evolving negotiation between practicality, ideology, and control. Tether and USDC thrive because they meet the needs of markets, despite their flaws. DAI and other decentralized options hold ideological ground and are still “good” And new entrants like Ethena’s USDe are trying to blend both worlds and there is still a market that considers them “good”.
So, what’s “good”?
➤ It really depends who’s asking — and who’s loud enough to be heard.
‘’No one group defines the future; it is the sum of competing visions.’’
— Adapted from Margaret Mead
5.0 What This Means For You As A Developer.
What I’ve been trying to say since the start of this stuff I’m writing is, if you want to build stablecoin-oriented products — especially now that there is significant, growing interest from outside of crypto, aka the institutions — the best route to take is surprisingly something you’ve been hearing since Adam.
The best stablecoin you can build is the one that will find its users, or its users will find it, in spite of its flaws —
because the intersection between crypto and the institution will bring about clashes due to the obvious difference in ethos,
and unless you come up with some hybrid solution, your stablecoin cannot fully serve all key players (that is, the institutions, the users, the issuers, etc. etc.).
So what will work is to find the one or two or three you can serve, and serve them well, and you’re good to go. Pun intended.
Hi. I’m STILL mad writing this.
I wrote this stuff because I lost a bounty — and ironically, it was a stablecoin-related bounty. Hurts, ngl.
But yeah, it was either I crash out on the TL or I vent through this piece. And it might not be perfect — hell, I don’t even know what I’m writing about half the time.
But as long as it serves one or two people well, I’m good.