If there is a business: users put money here, you take it to invest and earn 4-5% profit, not giving a penny to the users, you can earn hundreds of millions of US dollars in a year.

How long do you think this business can last? This is not a hypothesis; this is the USDT you have in hand.

CZ gave the answer last night: the era of making money while lying down is coming to an end.

| Tether's business model

Tether's profit in 2024 is reported to reach hundreds of millions, which is more profitable than many listed companies.

The business model is as follows: you deposit 1 dollar to Tether → it issues 1 USDT to you → then takes your money to buy U.S. Treasury bonds → you hold USDT without earning a penny in interest, Tether takes all the profits.

This is the model of stablecoin 1.0: simple and brutal, winner takes all.

I never thought about 'where the interest on my money went' until I started paying attention to DeFi, and only then did I realize this issue.

So a bunch of people want to share the cake.

Stablecoin 1.5: started giving yields, but liquidity is a problem.

CZ specifically praised Ethena's USDe in the AMA—this is 'Stablecoin 1.5'.

The biggest change: started distributing yields to users.

This sounds great, but the problem arises—poor liquidity.

Not all exchanges support USDe; if you want to trade, you may need to first exchange it for USDT, which incurs slippage, cross-chain transfers are troublesome, and many small exchanges simply do not support it.

This is the awkwardness of 1.5: it provides yields, but lacks liquidity.

The ideal of stablecoin 2.0: a trinity.

CZ made it very clear: 'A stablecoin that gives you good yields while being tradable on most exchanges sounds simple, but is very hard to achieve.'

Yield + liquidity + compliance, the trinity.

The main difficulty lies in convincing a lot of exchanges to list the coin, requiring branding, compliance, and technical integration; also ensuring that the source of yields is sustainable, we cannot engage in Ponzi schemes, compliance has become easier now, but the threshold still exists.

But the key point is that the regulatory environment is changing; in the past, when making stablecoins, regulators would come knocking, now governments around the world are studying 'how to compliantly create stablecoins'.

The U.S. is pushing the GENIUS Act, and regulators in other countries are 'no longer super hostile towards stablecoins'.

This is a huge signal.

Back in 2018, many said 'Bitcoin would be banned by the government'. Now the U.S. is discussing Bitcoin as a strategic reserve.

Stablecoins are the same, transitioning from 'you cannot do this' to 'you can do this, as long as you comply', this is a qualitative change.

| Will Tether be taken down?

No one knows, but I do know one thing: the excessive profits brought by monopolies will definitely attract competitors.

Tether earns billions every year, and this fact alone proves that this market is very good.
CZ's judgment is: the network effect will eventually take effect, and users will slowly concentrate on the most attractive options.

My understanding is: Tether will not suddenly die, but its market share will be gradually taken away.

Because no matter how strong the network effect is, it cannot counteract one fact: users are starting to awaken.

| Finally

CZ said: 'The market cap of cryptocurrency can still increase by several orders of magnitude.'

If this is true, then the stablecoin market will also increase by several orders of magnitude, which means more players will enter the market; how much can Tether hold? How much can 2.0 stablecoins take away?

But one thing is certain: the era of making money while lying down is coming to an end.

Users are starting to ask: 'Why hasn't a single cent of interest been given to me on the money I've deposited?'

Once this question is asked, there is no turning back.

The stablecoin war 2.0 has just begun.