Stablecoins have probably become the 2nd killer application in the crypto ecosystem after Bitcoin. And the transaction volumes are already exceeding all traditional payment channel benchmarks.
They kind of capture the full money movement revenue stack. JPYC’s Yen Yen-backed stablecoins, Wyoming USD-backed FRNT, and LG CNS Won-based stablecoins are making headlines at the moment due to their anticipated launches. In all this news, there’s a common name, Avalanche, ending up as the perfect battle-tested stack due to its credible 10+ stablecoin launches. A few days ago, South Korea announced its own stablecoin on an Avalanche L1.
In this article, we shall see why stablecoins are suddenly going in trend and how Avalanche L1s for stablecoins have provided the perfect base to build them. But before we do that, let’s give you a brief overview of Avalanche L1s
What are Avalanche L1s?
Avalanche L1s are sovereign blockchains with their own rules defining their operations, independent of the consensus layer. Due to this feature, they are ending up as the perfect choice to build not just stablecoins but different purpose-built L1s on top of them.
Read More: How Avalanche Became the Perfect Platform to Launch 100+ L1s in 2025?
But why are stablecoins trending intensively at the moment to create a race condition among governments, institutions, and corporations to use it? Is it because of the adoption, utility, or something else? Let’s find that out.
Stablecoins: A Then Vs Now Journey Defining A Transition In Action
When you think about stablecoins, the first and foremost thing that would come to your mind is that it was an important tool for crypto traders to hedge against market volatility during their inception period. But with the changing times, their identity changed.
Now stablecoins are not just a means to hedge against market risk for traders, rather, they are an integral financial vehicle to revolutionize modern finance because institutions and governments are integrating stablecoins to overcome some of their innate challenges like settlements, payroll, cross-border remittance, and so on and so forth.
But in this pursuit, they are indeed facing some systematic failures nonetheless when those stablecoins are launched on public blockchains. For example, Franklin Templeton started using stablecoins like USDC developed on public blockchains to expedite settlements, but while doing that, they faced a few pressing challenges, like;
- Compulsion to keep a huge amount of USDC buffer for providing near instantly liquidity as and when required to the users.
- High dependency on ZeroHash for providing on/off ramp services, which further complicated compliance and settlement rails.
- Blockchain network performance issues arise because launching stablecoins on top of public blockchains amounts to consensus delays, downtime, and privacy issues, which have an adverse impact on share redemption. And in most cases, they had to switch to manual systems to accommodate the same.
- High Operational cost for Franklin Templeton because they had to pay for the gas of the users, as using USDC didn’t allow payment in native tokens.
- And last but not least, regularity uncertainty, tech vulnerabilities, and other risks further plagued the operations.
Citing these reasons, Circle has been thinking of a purpose-built L1 for USDC to provide such institutions the leverage to issue their own gas tokens, control transaction costs, and keep network performance isolated from unrelated activity. But why is Circle inclined to provide a custom layer for stablecoins? Are they going to turn mainstream in 2025?
Emerging Use-Cases To Make Them Mainstream for Adoption
1. Trade Facilitation
In 2025, economies like the EU, UAE, and Hong Kong have created clear guidelines for derivative trading; thereby, attracting the interest of the institutions and retail platforms to build and expand their services.
For that matter, Stablecoins are acting as a perfect solution to move in and out of volatile assets. Stablecoins are still used for short-term holding between trades. But for institutions to use them, they should be coming up with advanced features to provide privacy controls, scale, and security.
2. National Currency Internationalization
Most of the economies are in a race to launch their own fiat-backed stablecoins. For example, China is exploring Yuan-backed stablecoins; similarly, the EU is accelerating the plan to make Euro-backed stablecoins in 2025 to compete with USD-backed stablecoins. But while doing all of these, they need to stay compliant and trade at scale.
3. Corporate and Institutional Adoption for Faster Settlements
Now, stablecoins are growing beyond speculation, with SpaceX sending back funds from Starlink sales in Argentina and Nigeria, and ScaleAI pays overseas contractors with them.
Institutions are increasingly exploring new use cases for stablecoin infrastructure, and it’s driving increased on-chain credit activity.
Institutions are also progressing to use stablecoins due to the regulatory immunity that they are going through upon showing their verifiable backing.
Some of the key names like Bank of America, Standard Chartered, PayPal, Revolut and Stripe are already exploring options to use them. But they want a great infrastructure, liquidity to make that happen.
4.The Yield Paradigm
On top of trading and payments , stablecoins are used in DeFi to earn yield:
So if stablecoin supply grows, established DeFi protocols will likely benefit from it:
– Aave/Morpho/Euler/Fluid
– Uniswap/Curve
– Maker
– Ethena
Yield is a key factor that influences stablecoin dynamics. Yet, probably the juiciest trades will come from new infra/consumer-facing/yield apps that are yet to launch. New, exciting tokens usually attract more attention.
How Avalanche L1s Could Make a Huge Difference?
If institutions, government, and retail want to use stablecoins, they need a few things to be resolved from the ground up, which the Avalanche L1 stack has been proposing through the following trade-offs;
1. Purpose Built Scale
When you want purpose-built scale, you need the readiness of the tech to meet any amount of scalability as and when needed.
Avalanche L1s for stablecoins are almost purpose-built because, unlike PoW/ BFT consensus engines, the Avalanche L1s use random sub-sampling. Due to this, instead of every validator having to validate for the blocks, a selected number of validators can simultaneously validate all the transactions coming. Due to this, Avalanche L1s are able to meet even 4500 TPS, almost equalling or surpassing Visa. Moreover, Avalanche has another major trade-off that you need when launching a stablecoin: the TTF or Time To Finality. Here as well, Avalanche L1s has left no stone unturned to end up as the perfect stack with sub-second finality due to its recent upgrades.
Extremely Economical Operations
When you are launching a stablecoin on top of a blockchain, you have to acknowledge the point that these coins are accounting for $1.48 trillion in transactions spread across DeFi, lending, and exchange platforms. That said, the infrastructure supporting the stablecoin should be such that it can accommodate such a scale at a fraction of the cost; otherwise, the whole purpose of using stablecoins will be defeated. For example, suppose you are performing all these transactions on blockchains like Ethereum, you will have to incur $61 M in fees. But the whole equation changes when your blockchain stack has such features to optimize massive scaling at a fraction of cost.
In this regard, Avalanche L1s make the difference because of the ACP-125 upgrade. Under ACP 125 upgrade, the fee reduction hits a critical point from 25 nAVAX to 1 nAVAX, which is like a 96% reduction in fees. So, if an institution/ government was spending supposedly $3,189 on gas fees other stack, now they will be spending $579 due to this upgrade, which is purpose-built to accommodate transactions at scale that stablecoins demand.
Subnet Architecture for Custom Chains
Like it was said in the stablecoin then vs now section, Franklin Templeton had to manage compliance using ZeroHash, on Avalanche L1s, launching a stablecoin to use for any purpose wouldn’t have to go down that road because of the subnet architecture. The subnets will provide almost a custom application deployment environment which means you can integrate KYC/ AML, access control, role-based access, auditability, verifiability and privacy controls. And the best part would be that you are doing all of that without congesting the network or putting the performance at risk.
EVM Compatibility
With Avalanche L1s, you also get EVM compatibility while launching stablecoins. Which means, you do not have to think about liquidity bottlenecks because the tech infrastructure would be such that you can easily import liquidity from other ecosystems. For that matter, the Avalanche L1s would be helping in this regard by allowing the new stablecoins issued to partner with Avalanche Native DeFi protocols like DEXes, money markets like BENQI, and Yield Yak. Moreover, there’s also provision where you can bring in bootstrapped liquidity for your stablecoins on Avalanche by deploying different mechanisms like Native Tokens Incentives and other means to attract that and since the chain will be EVM compatible, other ecosystems can also tap into these offers.
Battle Tested Security
Last but not least, when you want the freedom to move value across borders, within the country and even empower merchant level adoption using stablecoins, security should be the tipping point to acknowledge. In this regard, Avalanche L1s are purpose built because of institutional participation as validator nodes to validate for the chains. Which means, if you want to put institutions as validators for your L1 chain for stablecoins, you can go ahead and do that with the Avalanche L1.
At the moment, top names like FiFa, Deloitte and Watr Foundation are validating for the Avalanche L1 chain. This is what as an institution or a government you need that your stack should provide peak security that Avalanche L1s are delivering from the grounds up for the Stablecoin launch.
Stablecoins have a long way to go because it is expected that they will touch $2 T by 2028. So, if you want to integrate the same in your business process and want reliable support to help in this regard, Zeeve can help you.
Launch Your Stablecoin on Avalanche L1s with Zeeve
Zeeve has been helping in simplifying the development of your stablecoins on Avalanche L1s (Formerly known as Subnets) using a wide range of tools and its own platform. So, if you want to build your own stablecoin as per your use-cases specific requirement, from rapid node & network setup to RPC configurations to validator node settings, Zeeve would be catering to all that your Avalanche L1 custom chain requires in a frugal manner without compelling you to undertake heavy investments for building the infrastructure.
In addition to this, Zeeve also offers a powerful Avalanche L1 management dashboard to give you detailed insights and a real-time view of your active L1s and their vital aspects, such as node performance, validators, account & access control configuration, as well as system-level monitoring.
With more than 30+ third-party integrations, you get everything to building your scalable stablecoin on Avalanche L1 custom chain. If you want to build your next stablecoin as soon as possible and don’t know how to get started with it, just speak to all our experts and we can help you launch your stablecoin on Avalanche for enterprise grade usage. For more information, Email us your queries or schedule a one-to-one call for an Avalanche L1 demo.
