Non-USD Stablecoins & On-Chain FX

The Dollar Dominates — But Not Entirely

The overwhelming majority of stablecoins are pegged to the US dollar (USDT, USDC and others), which effectively extends dollar dominance onto blockchains — most on-chain value moves in digital dollars. But a growing set of stablecoins track other currencies: euro stablecoins (such as EURC), and smaller ones for other major currencies. These non-USD stablecoins let people hold and move value on-chain in their own or other currencies, and they are the building blocks for doing foreign exchange — swapping one currency for another — directly on-chain rather than through banks.

What On-Chain FX Means

On-chain foreign exchange means trading one currency's stablecoin for another's — say a euro stablecoin for a dollar stablecoin — using blockchain rails, so the conversion settles in seconds at low cost, any time, without a bank's FX desk. Combined with stablecoin payment rails, this points at a world where someone can hold euros on-chain, pay a counterparty who wants dollars, and have the FX happen automatically and cheaply as part of the transaction. It is early, and liquidity for non-dollar pairs is thin, but the potential to make cross-border payments and currency conversion dramatically cheaper and faster — especially for remittances — is the reason the area attracts attention.

• Most stablecoins are USD-pegged, extending dollar dominance on-chain
• Euro and other-currency stablecoins (e.g. EURC) are a growing minority
• On-chain FX = swapping one currency's stablecoin for another's, on blockchain rails
• The promise is cheaper, faster cross-border payments and remittances