Mastering the Dollar: Arthur Hayes' In-depth Analysis of How Stablecoins Disrupt the World

Author: Arthur Hayes, Founder of BitMEX

Compiled by: BitpushNews

(This article reflects the author's personal opinions and should not be considered as investment advice or recommendations for trading.)

U.S. Treasury Secretary Scott Bessent should have a new nickname. I once called him "BBC," which stands for "Big Bessent Cock." Although his radical maneuvers are reshaping the global financial system, this moniker still fails to capture the full extent of his impact. I believe a more fitting title is needed to describe the shockwaves he will create in two key areas: the Eurodollar banking system and foreign central banks.

Like the serial killer in the movie "The Silence of the Lambs"—a classic worth a late-night watch for any newcomer—Scott "Buffalo Bill" Bessent is preparing to reshape the Eurodollar banking system and take control of foreign non-dollar deposits. In ancient Rome, slaves and elite legions maintained the "Pax Romana"; in modern times, the dollar's hegemony upholds "Pax Americana." The "enslavement" in Pax Americana does not merely refer to the African slaves transported to the Americas in history; today, it manifests as the monthly repayment of debts—generations of young people voluntarily taking on heavy debts just to obtain worthless degrees, hoping to land jobs at top firms like Goldman Sachs, Sullivan & Cromwell, or McKinsey. This form of control is broader, more insidious, and more effective. Unfortunately, with the rise of artificial intelligence, these heavily indebted individuals may face unemployment risks.

Let me digress.

This article will discuss the control of the dollar over global reserve currencies under "Pax Americana." The effectiveness of U.S. Treasury Secretaries in wielding the dollar as a financial scepter has varied. One of the most notable failures has been the inability to prevent the formation of the Eurodollar system.

The Eurodollar system emerged in the 1950s and 1960s, originally intended to circumvent U.S. capital controls (such as Regulation Q), evade economic sanctions (the Soviet Union needed a channel to store dollars), and provide banking services for non-U.S. trade flows during the post-World War II economic recovery. At that time, monetary authorities could have recognized the demand for dollars abroad and allowed major domestic financial institutions to take on this business, but domestic political and economic considerations forced them to take a hardline stance. As a result, the Eurodollar system expanded over the following decades, developing into a financial force that cannot be ignored. It is estimated that the volume of Eurodollar deposits circulating in non-U.S. bank branches globally ranges between $10 trillion and $13 trillion. The flow of this capital has triggered multiple financial crises post-war, each requiring money printing to bail out the system. A paper published by the Atlanta Fed in August 2024, titled "Offshore Dollars and U.S. Policy," analyzed this phenomenon.

For "Buffalo Bill" Bessent, there are two main issues with the Eurodollar system. First, he knows almost nothing about the scale of Eurodollars and how these funds are used. Second, and more critically, these Eurodollar deposits are not being used to purchase the low-quality U.S. Treasury bonds he holds. So, does Bessent have a way to address both issues simultaneously? Before answering that, let's briefly review the foreign retail depositors' foreign exchange holdings.

De-dollarization is indeed occurring. It began to accelerate significantly in 2008 when U.S. financial leaders chose to rescue banks and financial institutions facing collapse due to bad bets with unlimited quantitative easing (QE Infinity), rather than allowing them to fail naturally. An effective indicator of how global central banks reacted to holding trillions of dollars in dollar-denominated assets is the proportion of gold in their foreign exchange reserves. The higher the proportion of gold in reserves, the lower the trust in the U.S. government.

As can be observed, since the 2008 financial crisis, the proportion of gold in central bank reserves has rebounded from a low point and has begun to show a long-term upward trend.

This is the TLT U.S. ETF, which tracks U.S. Treasury bonds with maturities of 20 years or more and divides its price by the price of gold. I have indexed it to 100 starting from 2009. Since 2009, the value of U.S. Treasury bonds relative to gold has fallen by nearly 80%. The U.S. government's monetary policy is to rescue its banking system while sacrificing domestic and foreign creditors. It is no wonder that foreign central banks have begun to hoard gold like Scrooge in "DuckTales." Former President Trump also intended to adopt a similar strategy, but in addition to attacking bondholders, he believed he could tax foreign capital and trade flows through tariffs to "Make America Great Again."

Bessent actually finds it difficult to persuade foreign central bank reserve managers to buy more Treasury bonds. However, there exists a large group of underbanked individuals in the Global South who are eager to have a positive-yielding dollar account. As you know, all fiat currencies are trash compared to Bitcoin and gold. But within the fiat system, the dollar remains the best choice. Domestic regulators, who dominate most of the global population, force their citizens to hold high-inflation inferior currencies while restricting their access to the dollar financial system. These individuals would buy the Treasury bonds offered by Bessent just to escape their terrible domestic bond markets. So, does Bessent have a way to provide banking services to these people?

I first visited Argentina in 2018 and have returned almost every year since. This chart shows the ARS/USD index since September 2018 (indexed to 100). Over seven years, the Argentine peso has depreciated by 97% against the dollar. Now when I go there, most of the time I ski, and I pay all service staff in USDT.

"Buffalo Bill" Bessent has found a new tool to solve his problems—that is dollar-pegged stablecoins. The U.S. Treasury is now promoting the development of these stablecoins, and the empire will support specific issuers to help them consolidate Eurodollar systems and retail deposits from the Global South. To understand this, I will first briefly introduce the structure of "acceptable" dollar-pegged stablecoins, then discuss their impact on the traditional banking system. Finally, and most importantly for the crypto community, I will explain why the global promotion of dollar-pegged stablecoins supported by Pax Americana will drive long-term growth in decentralized finance (DeFi) applications, especially Ethena, Ether.fi, and Hyperliquid.

As you know, Maelstrom is not working for free. We have packages upon packages, never enough to fill them all.

If you are not satisfied with stablecoins yet, I will mention a new stablecoin infrastructure project we are advising—Codex. I believe it will become the best-performing token from the upcoming Token Generation Event (TGE) until the end of this cycle.

What are "acceptable" stablecoins?

Dollar-pegged stablecoins are similar to narrow banks. Issuers accept dollars and invest these dollars in risk-free bonds. In nominal dollar terms, the only risk-free bond is U.S. Treasury bonds. Specifically, since stablecoin issuers must be able to provide physical dollars when holders redeem, they will only invest in short-term Treasury bills (T-bills), which are bonds with maturities of less than one year. With almost no duration risk, their trading behavior is almost equivalent to cash.

Take Tether USD (USDT) as an example:

1. An Authorized Participant (AP) wires dollars into Tether's bank account.

2. Tether creates 1 USDT for every dollar deposited.

3. To generate yield on these dollars, Tether buys Treasury bills (T-bills).

For example: If the AP wires in $1,000,000, they will receive 1,000,000 USDT.
Tether uses this $1,000,000 to purchase an equivalent amount of T-bills.

USDT itself does not pay interest, but these T-bills actually pay the Federal Reserve's fund rate, which is currently around 4.25% to 4.50%.
Thus, Tether earns a net interest margin (NIM) of 4.25% to 4.50%.

To attract more deposits, Tether or related financial institutions (like crypto exchanges) will pay a portion of the NIM to users willing to stake USDT. Staking means locking USDT for a period to earn interest.

The redemption process for stablecoins is as follows:

1. An Authorized Participant (AP) sends USDT to Tether's crypto wallet.

2. Tether sells the corresponding T-bills for the dollar amount of USDT.

3. Tether wires $1 for each USDT to the AP's bank account.

4. Tether destroys the corresponding USDT, removing it from circulation.

Tether's business model is very simple: accept dollars, issue digital tokens on a public blockchain, invest dollars in T-bills, and earn a net interest margin (NIM).

Bessent will ensure that stablecoin issuers supported by the empire can only deposit dollars in chartered U.S. banks or invest in Treasury bonds. There will be no "flashy" operations.

Impact of the Eurodollar System

Before the emergence of stablecoins, the Federal Reserve and the Treasury always stepped in to rescue Eurodollar banking institutions when problems arose. A well-functioning Eurodollar market is crucial for the overall health of the empire. However, now Bessent has a new tool to absorb these fund flows. At a macro level, he must provide reasonable incentives for Eurodollar deposits to go on-chain.

For example, during the 2008 global financial crisis, the Federal Reserve secretly provided billions of dollars in loans to foreign banks that were short on dollars due to the collapse of subprime mortgages and their related derivatives. As a result, Eurodollar depositors generally believed that the U.S. government implicitly guaranteed their funds, even though technically they were outside the U.S. regulatory framework. If it were announced that non-U.S. bank branches would not receive assistance from the Federal Reserve or the Treasury in future financial crises, Eurodollar deposits would be directed into the arms of stablecoin issuers. If you think this is exaggerated, a strategist at Deutsche Bank publicly questioned whether the U.S. would use dollar swap tools to force Europe to comply with the demands of the Trump administration. It is certain that Trump would very much like to weaken the Eurodollar market by effectively "debanking" it—these institutions had "debanked" his family business after his first term, and now is the time for revenge. Retribution, indeed, is cruel.

Without guarantees, Eurodollar depositors will, out of self-interest, transfer their funds into dollar-pegged stablecoins like USDT. Tether's assets are all held in the form of U.S. bank deposits or Treasury bills (T-bills). Legally, the U.S. government guarantees all deposits in the eight "too big to fail" (TBTF) banks; after the regional banking crisis in 2023, the Federal Reserve and the Treasury effectively guaranteed all deposits in U.S. banks or branches. The default risk of T-bills is almost zero because the U.S. government will never voluntarily go bankrupt—it can always print dollars to repay bondholders. Therefore, stablecoin deposits are risk-free in nominal dollars, while Eurodollar deposits are no longer so.

Soon, dollar-pegged stablecoin issuers will see an influx of $10 trillion to $13 trillion in funds, which will subsequently purchase T-bills. Stablecoin issuers will become large, price-insensitive buyers of the Treasury bonds issued by Bessent!

Even if Federal Reserve Chairman Powell continues to obstruct Trump's monetary agenda, unwilling to lower the federal funds rate, end balance sheet reduction, or restart quantitative easing, Bessent can still offer T-bills at rates below the federal funds rate. He can do this because stablecoin issuers must purchase his products at the given rates to make a profit. In just a few steps, Bessent has taken control of the front end of the yield curve. The continued existence of the Federal Reserve has become meaningless. Perhaps a statue of Bessent will stand in some square in Washington, styled after Cellini's "Perseus with the Head of Medusa," named "Bessent and the Head of the Jekyll Island Monster."

Impact on the Global South

American social media companies will become the Trojan horse that undermines foreign central banks' control over the currency supply of their ordinary citizens. In the Global South, the penetration of Western social media platforms (Facebook, Instagram, WhatsApp, and X) is nearly universal.

I have lived in the Asia-Pacific region for half my life. There, converting depositors' local currency into dollars or dollar-equivalent assets (like the Hong Kong dollar) to earn dollar yields and invest in U.S. stocks is a significant part of the investment banking business.

Local monetary authorities implement "whack-a-mole" regulation against traditional financial institutions (TradFi) to block capital outflows. Governments need to control the funds of ordinary citizens and, to some extent, wealthy individuals with non-political connections to absorb funds through inflation taxes, support poorly performing state-owned enterprises, and provide low-interest loans to heavy industries. Even if Bessent wants to use large U.S. financial center banks as entry points to provide banking services to these cash-strapped individuals, local regulations prohibit this practice. But there is another, more effective way to reach these funds.

Everyone, except mainland China, is using Western social media companies. What if WhatsApp launched a cryptocurrency wallet for every user? Within the app, users could seamlessly send and receive approved dollar-pegged stablecoins (like USDT). What would happen if this WhatsApp stablecoin wallet could also transfer to any wallet on different public chains?

Let’s illustrate with a fictional case of how WhatsApp could provide digital dollar accounts for billions of users in the Global South:

Fernando is a Filipino who runs a click farm in the countryside, creating fake followers and views for social media influencers. Since his clients are all outside the Philippines, receiving payments is both difficult and expensive. WhatsApp has become his primary payment tool because it provides a wallet for sending and receiving USDT. His clients also use WhatsApp and are willing to stop using the inefficient banking system. Both parties are satisfied, but this effectively bypasses the local Philippine banking system.

After a while, the Central Bank of the Philippines notices a significant outflow of bank funds. They realize that WhatsApp has widely promoted dollar-pegged stablecoins domestically, and the central bank has effectively lost control over the currency supply. However, they are almost powerless to stop it. The most effective way to prevent Filipinos from using WhatsApp would be to cut off the internet. Even attempts to pressure local Facebook executives would be futile. Mark Zuckerberg rules Meta from his sanctuary in Hawaii and has received approval from the Trump administration to promote stablecoin features for Meta users globally. Any legal restrictions on internet companies in the U.S. would provoke threats of increased tariffs from the Trump administration. Trump has explicitly threatened the EU that it would face higher tariffs if it does not repeal "discriminatory" internet legislation.

Even if the Philippine government removes WhatsApp from Android and iOS app stores, determined users can easily bypass the ban using a VPN. Of course, any friction will affect usage, but social media is essentially an addictive drug for the masses. After more than a decade of continuous dopamine stimulation, ordinary people will find any way to continue using the platform.

Finally, Bessent can leverage sanctions. Asian elites will naturally not want their wealth devalued by their domestic monetary policies, as they store their wealth in overseas dollar banking centers. Do as I say, not as I do. Suppose Philippine President Bongbong Marcos threatens Meta; Bessent could immediately retaliate by sanctioning him and his associates, freezing their billions in overseas wealth unless they yield and allow stablecoins to spread in their country. His mother, Imelda, knows how long the arm of U.S. law can be; she and her late dictator husband Ferdinand Marcos faced RICO charges for misappropriating Philippine government funds to purchase real estate in New York. It is certain that Bongbong Marcos does not want to go through that ordeal again.

If my argument is correct, that stablecoins are the core tool of Pax Americana to expand the use of the dollar, then the empire will protect American tech giants from local regulatory retaliation while providing banking services in dollars to ordinary citizens. And these governments will have little recourse.

Assuming my judgment is valid, how large is the potential addressable market (TAM) for stablecoin deposits from the Global South? The most advanced group of countries in the Global South is the BRICS nations. Excluding China, as it has banned Western social media companies. The question is, how much is the scale of local currency bank deposits? I consulted Perplexity, which provided an answer of $4 trillion. I know this may be controversial, but I think it is reasonable to include the "Euro-poor zone" countries that use the euro. The euro is on the verge of collapse under Germany-first and France-first economic policies, and the Eurozone will eventually be split. With future capital controls, by the end of this century, the euro's only practical use may be to pay for Berghain tickets and Shellona's minimum consumption.

Adding the $16.74 trillion in European bank deposits to the calculation brings the total close to about $34 trillion, indicating an extremely large potential stablecoin deposit market.

Go Big or Get Taken Down by the Democrats

Buffalo Bill Bessent faces a choice: either go big or let the Democrats win. Does he want the red team to win in the 2026 midterm elections and, more importantly, in the 2028 presidential election? I believe he does, and the only way to achieve this goal is to provide ordinary citizens with more benefits than Mamdanis and AOCs. Therefore, Bessent needs to find a buyer for Treasury bonds who does not care about price. Clearly, he sees stablecoins as part of the solution, as evidenced by his public support for this technology. But he must go all in.

If funds from the Global South, the Euro-poor zone, and European Eurodollars do not flow into stablecoins, he must use his "heavy-handed tactics" to force the money in. This means either flowing into dollars as required or facing sanctions again.

• Purchasing power generated by Treasury bonds from dismantling the Eurodollar system: $10–13 trillion

• Retail deposit purchasing power from the Global South and Euro-poor zone: $21 trillion

• Total approximately $34 trillion

Clearly, not all funds will flow into dollar-pegged stablecoins, but at least we can see the enormous potential addressable market.

The real question is, how will up to $34 trillion in stablecoin deposits drive DeFi usage to new heights? If there are compelling reasons to believe that DeFi usage will grow, which crypto projects will benefit the most?

The Logic of Stablecoin Inflows into DeFi

The first concept to understand is staking. Suppose part of this $34 trillion already exists in stablecoin form. To simplify, let’s assume all inflows go into Tether's USDT. Due to fierce competition from other issuers like Circle and large TBTF banks, Tether must share part of its net interest margin (NIM) with holders. They partner with some exchanges to allow staked USDT in exchange wallets to earn interest, paid in newly issued USDT.

Here’s a simple example:

Fernando in the Philippines has 1,000 USDT. The Philippine exchange PDAX offers a 2% staking yield. PDAX creates a staking smart contract on Ethereum. Fernando sends 1,000 USDT to the smart contract address, and the following occurs:

1. His 1,000 USDT becomes 1,000 psUSDT (PDAX staked USDT, PDAX's liability). Initially, 1 USDT = 1 psUSDT, but as interest accumulates daily, psUSDT gradually appreciates. For example, using a 2% annual interest rate and simple interest calculated as ACT/365, psUSDT grows by about 0.00005 daily. After one year, 1 psUSDT = 1.02 USDT.

2. Fernando receives 1,000 psUSDT in his exchange wallet.

A powerful thing happens: Fernando locks USDT in PDAX in exchange for an interest-bearing asset, psUSDT. psUSDT can now be used as collateral in the DeFi ecosystem, exchanged for other cryptocurrencies, used for collateralized lending, or leveraged derivatives trading on DEXs.

A year later, if Fernando wants to redeem psUSDT back to USDT, he simply unstakes on the PDAX platform, psUSDT is burned, and he receives 1,020 USDT. The extra 20 USDT in interest comes from Tether's partnership with PDAX. Tether creates additional USDT from the NIM earned from its Treasury bond portfolio to meet contractual obligations to PDAX.

Thus, both USDT (the base currency) and psUSDT (the yield-bearing currency) become acceptable collateral in the DeFi ecosystem. In this way, a portion of the overall stablecoin flow will enter DeFi applications (dApps). Total Value Locked (TVL) is used to measure this interaction. Users must lock funds when operating in DeFi dApps, and this portion of funds is reflected as TVL. TVL is a leading indicator of trading volume and future revenue and is an important basis for predicting future cash flows of DeFi dApps.

Before analyzing how TVL affects a project's future earnings, let me outline the main assumptions used in the upcoming financial models.

Model Assumptions

Next, I will present three simple yet powerful financial models to estimate the target prices of Ethena (token: $ENA, Ether.fi (token: $ETHFI), and Hyperliquid (token: $HYPE) by the end of 2028. I chose to forecast until the end of 2028 because that is when Trump is set to leave office. My baseline assumption is that the probability of a blue team (Democrat) president being elected is slightly higher than that of a red team (Republican). The reason is that Trump, in less than four years, cannot fully rectify the losses his supporters have suffered from half a century of accumulated monetary, economic, and foreign policy impacts. Worse still, no politician will fully deliver on campaign promises. Therefore, the voter turnout of red team voters will decline.

Grassroots red team voters lack enthusiasm for Trump's successor and will not show up in sufficient numbers to be outnumbered by blue team voters influenced by Trump Derangement Syndrome (TDS), who are often childless cat owners. Any member of the blue team who comes to power will implement unfavorable monetary policies due to TDS, merely to prove they are different from Trump. But ultimately, no politician can resist money printing, and dollar-pegged stablecoins become the best price-insensitive buyers of short-term Treasury bonds. Therefore, while the new president may not initially support stablecoins wholeheartedly, they will soon realize that lacking this capital will make it impossible to move forward, ultimately continuing the aforementioned policies. This policy oscillation will trigger a bubble burst in the crypto market, leading to an epic bear market.

Moreover, the numbers in my models are enormous. This is a once-in-a-century transformation of the global monetary system. Unless we are continuously injected with stem cells for life, most investors may never encounter a similar event again. I predict the potential returns will far exceed SBF's amphetamine habit. Under the promotion of dollar-pegged stablecoins, the bull market in the DeFi ecosystem will be unprecedented.

Because I like to make predictions with decimal numbers ending in zero, I estimate that by 2028, the total circulation of dollar-pegged stablecoins will reach at least $10 trillion. This is due to the enormous and exponentially growing deficit that Bessent must finance. The more Bessent finances with Treasury bonds, the faster the debt accumulates, as he must roll over the debt each year.

The next key assumption is what level Bessent and the new Federal Reserve Chair after May 2026 will set the federal funds rate at. Bessent has publicly stated that the federal funds rate is 1.50% too high, while Trump often calls for a 2.00% cut. Considering that policies often overshoot, I believe the federal funds rate will ultimately settle quickly around 2.00%. This number has no strict basis; like institutional economists, we are all improvising, so my numbers are as reliable as theirs. Political and economic realities require the empire to provide cheap funding, and a 2% rate fits that need perfectly.

Finally, my prediction for the 10-year Treasury yield: Bessent's goal is to achieve 3% real growth, plus a 2% federal funds rate (theoretically representing long-term inflation levels), resulting in a 10-year yield of about 5%. I will use this yield to calculate the present value of terminal cash flows.

Based on these assumptions, we can derive the terminal value of cumulative cash flows. Since these cash flows can be used for token buybacks, they can serve as the fundamental value of specific projects. This is how I estimate and predict FDV (Fully Diluted Value). Then, I will compare the model predictions with current market values to clearly reveal the potential upside.

All model inputs are shown in blue, and outputs are shown in black.

Spend It

The most important behavior of new stablecoin users is to use them to purchase goods and services. Nowadays, everyone is accustomed to tapping their phones or debit/credit cards at checkout systems. Stablecoins must also be just as convenient. Which project allows users to deposit stablecoins into decentralized applications (dApps) and spend them like using a Visa debit/credit card? There is one, called Ether.fi Cash.

Global users can register in just a few minutes, and after completing the onboarding process, they receive their Visa-supported stablecoin spending card. You can use it on your phone or through a physical card. Once stablecoins are deposited into the Ether.fi wallet, they can be spent anywhere Visa is accepted. Ether.fi can even provide credit limits based on your stablecoin balance, allowing your spending power to "accelerate."

I am both an advisor and an investor in the Ether.fi project, so I am obviously biased, but I have been waiting for a low-fee offline crypto spending solution for over ten years. The customer experience is nearly the same whether I use Amex or Ether.fi Cash. This is crucial because it is the first time many people in the Global South can use stablecoins and Ether.fi to pay for goods and services globally.

The core highlight is to build it as a financial supermarket, offering a variety of traditional banking products. Subsequently, Ether.fi can provide more value-added products for depositors. I predict the key ratio for future cash flows is the "Fee / Vault Ratio": how much revenue can Ether.fi earn for every dollar of stablecoin deposited? To arrive at a defensible number, I looked at the latest annual report of the world's best-managed commercial bank—JPMorgan. On a deposit base of $1,060.4 billion, they achieved $18.8 billion in revenue, resulting in a Fee / Vault Ratio of 1.78%.

Ether.fi Cash deposit ratio: This metric indicates how much stablecoin is deposited into the cash vault. Currently, this product has only been launched for four months, with a deposit ratio of 0.07%. Given that the product has just gone live, I believe this ratio could grow to 1.00% by 2028.

Based on this, I believe $ETHFI could potentially rise 34 times from its current price.

Now that ordinary users (plebes) can spend stablecoins, is there a way to earn higher yields than the federal funds rate?

Lending Opportunities

As more people start using stablecoins to buy coffee, they naturally want to earn interest. I previously mentioned that issuers like Tether will distribute part of the net interest margin (NIM) to holders, but this amount will not be substantial; many savers will seek higher yields without taking on excessive additional risk. So, are there new endogenous yields within the crypto capital markets that new stablecoin users can capture? The answer is yes, Ethena provides higher yield opportunities.

In the crypto capital markets, there are only two safe ways to lend funds: lending to speculators for derivatives trading or lending to crypto miners. Ethena focuses on lending to speculators, hedging long crypto funds by shorting crypto/dollar futures and perpetual swaps. This is the strategy I referred to as "cash and carry" when promoting BitMEX. I later wrote an article titled "Dust on Crust," calling on entrepreneurs to package this trading into synthetic dollars and high-yield stablecoins. Ethena's founder, Guy Young, read the article and assembled a top team to put it into practice. Maelstrom subsequently became the founding advisor. Ethena's USDe stablecoin has rapidly accumulated about $13.5 billion in deposits within 18 months, becoming the fastest-growing stablecoin, currently ranking third in circulation, behind Circle's USDC and Tether's USDT. Ethena's growth is so rapid that by next St. Patrick's Day, it will become the second-largest stablecoin issuer after Tether, making Circle CEO Jeremy Allaire drink a Guinness to drown his sorrows.

Due to counterparty risks at exchanges, the interest rates for speculators borrowing dollars to go long on crypto assets are usually higher than Treasury bond rates. When I created perpetual contracts with the BitMEX team in 2016, I set the neutral interest rate at 10%. This means that if the perpetual contract price equals the spot price, the long position pays the short position an annualized interest rate of 10%. Every exchange designed after BitMEX has adopted this 10% neutral interest rate. This is important because 10% is far above the current federal funds rate cap of 4.5%. Therefore, the yield on staked USDe is almost always higher than Fed Funds, providing new stablecoin depositors willing to take on a small amount of additional risk with an opportunity to earn an average of double the yields offered by Buffalo Bill Bessent.

Some (but not all) new stablecoin deposits will be saved through Ethena to earn higher yields. Ethena takes 20% of the interest income as a fee. Here’s a simple model:

USDe market share: Currently, Circle's USDC has a market share of 25% among circulating stablecoins. I believe Ethena will surpass Circle, and over time, we will see marginal outflows from USDC being absorbed by USDe. Therefore, my long-term assumption is that USDe will capture 25% market share after Tether's USDT.

USDe average yield: In my projected long-term scenario, with a USDe supply of $2.5 trillion, this will exert downward pressure on the basis between derivatives and spot. As Hyperliquid becomes the largest derivatives exchange, they will lower the neutral interest rate to increase leverage demand. This also means that the open interest (OI) in the crypto derivatives market will grow significantly. If millions of new DeFi users have trillions of dollars in stablecoin deposits at their disposal, they will have the capacity to push open interest to the trillion-dollar level.

Based on this, I believe the value of $ENA could potentially rise 51 times from its current level.

Now that the common people can earn more interest income, the question is: how do they trade their way out of poverty caused by inflation?

Trade It

One of the most severe impacts of global currency devaluation is that it forces everyone to become a speculator to maintain their standard of living—if they do not already have a pile of financial assets. As more people long-term affected by the arbitrary devaluation of fiat currencies begin to save on-chain through stablecoins, they will trade the only asset class that gives them a chance to escape poverty through speculation—cryptocurrencies.

The current preferred platform for on-chain trading is Hyperliquid (token: $HYPE), which has captured a 67% market share in the decentralized exchange (DEX) market. Hyperliquid is highly transformative, and its growth rate even surpasses centralized exchanges (CEX) like Binance. By the end of this cycle, Hyperliquid is expected to become the largest crypto exchange, and Jeff Yan may be richer than Binance's founder and former CEO CZ.

The king is dead; long live the king!

The theory that DEX will consume all other types of exchanges is not new, but what sets Hyperliquid apart is the execution of the team. Jeff Yan has assembled a team of about ten people whose product iteration speed and quality surpass any centralized or decentralized team in the industry.

The simplest way to understand Hyperliquid is to view it as a decentralized version of Binance. Since Tether and other stablecoins primarily support Binance's funding channels, Binance can be seen as a predecessor to Hyperliquid. Hyperliquid also relies entirely on stablecoin infrastructure for deposits but offers an on-chain trading experience. With the launch of HIP-3, Hyperliquid is rapidly transforming into a permissionless derivatives and spot giant. Any application wishing to have a high-liquidity limit order book and achieve real-time margin management can integrate the required derivatives market through HIP-3.

I predict that by the end of this cycle, Hyperliquid will become the largest crypto exchange, and the growth of stablecoin circulation to $10 trillion will further accelerate this development. Taking Binance as an example, we can predict Hyperliquid's average daily trading volume (ADV) based on stablecoin supply levels.

Currently, Binance's average daily trading volume for perpetual contracts is $73 billion, with a total stablecoin supply of $277 billion; the ratio is 26.4%. In the model, this ratio will represent Hyperliquid's ADV market share.

I believe $HYPE has the potential to rise 126 times from its current level.

Finally, I want to introduce a stablecoin project I am most looking forward to, which is about to conduct a token issuance.

Enterprise Applications of Stablecoins

As millions or even billions of users begin to use stablecoins, how can enterprises leverage this payment method? Most businesses globally still face high fees and banking restrictions in payments. As more users hold stablecoins, businesses can bypass traditional banks for convenient payments, which requires an easy-to-use technical system that allows businesses to accept stablecoin payments, pay suppliers, pay taxes, and manage cash flow.

Codex is such a project; it has launched a blockchain designed specifically for stablecoins. Codex itself is not an issuer but provides stablecoin and fiat payment solutions between enterprises, enabling seamless conversion between stablecoins and fiat. Returning to Fernando and his click farm, he needs to pay his employees in pesos to their local bank accounts. Through Codex, he can convert part of the stablecoins paid by clients into pesos and deposit them directly into his bank account. Codex has already achieved this functionality, with a transaction volume of $100 million in its first month.

More importantly, Codex has the potential to provide credit support to small and medium-sized enterprises. Currently, it only offers short-term credit to the safest payment service providers, but in the future, it could provide long-term loans to SMEs. If businesses are fully on-chain and use Codex to process payments, they can achieve "triple entry bookkeeping"—with all income and expenses on-chain, allowing lenders to assess the financial status of businesses in real-time and with confidence provide loans. Currently, traditional banks typically only lend to large enterprises or wealthy individuals with political connections, making it difficult for SMEs to obtain financing.

In my vision, Codex will first serve the Global South market and then expand to developed countries outside the U.S. By providing loans to SMEs through stablecoin infrastructure, Codex is poised to become the first true crypto bank.

Codex is still in its early stages, but if successful, it will greatly benefit users and token holders. Before Maelstrom became an advisor, I ensured that the founding team was ready to adopt a token economic strategy similar to Hyperliquid, allowing revenue to flow directly back to token holders. Codex already has real transaction volume and is about to conduct a token issuance, making it a great opportunity to enter the stablecoin infrastructure space.

Buffalo Bill Bessent's Strategy

Buffalo Bill Bessent's control over the global Eurodollar and non-dollar deposits depends on U.S. government fiscal policy. I believe Bessent's boss—President Trump—has no intention of cutting spending or balancing the budget. His goal is merely to win elections. Political winners in late-stage capitalist democracies gain votes by distributing benefits. Therefore, Bessent will take bold actions in fiscal and monetary areas, and no one can stop him.

As the U.S. deficit continues to expand, and Pax Americana's global hegemony weakens, the market is unwilling to hold weak dollar debt. Bessent's use of stablecoins to absorb Treasury bonds becomes an inevitable means.

He will widely employ sanctions to ensure that dollar stablecoins absorb funds flowing from Eurodollars and non-U.S. retail banks. At the same time, he will mobilize tech giants (like Zuckerberg and Musk) to promote stablecoins, popularizing them among global users, even if local regulations do not allow it, they will be protected by the U.S. government.

Possible Trends

If my judgment is correct, we may see the following trends:

• The offshore dollar market (Eurodollar) under regulatory scrutiny

• The Federal Reserve's and Treasury's dollar swap limits linked to U.S. tech companies entering the digital market

• Stablecoin issuers required to hold dollars or Treasury bonds

• Encouragement for stablecoin issuers to list in the U.S.

• U.S. tech companies increasing crypto wallet features in social media applications

• The Trump administration openly supporting the use of stablecoins

Maelstrom will continue to heavily invest in the stablecoin space, holding $ENA, $ETHFI, and $HYPE. Meanwhile, Codex will become a core project in the stablecoin infrastructure.

Final note: Quickly pass me the dollar "lotion"; I'm feeling a bit dry.