A New Challenger Enters the Stablecoin Arena
Reeve Collins, one of the original creators of Tether (USDT), is making a comeback. But this time, he’s launching a new type of stablecoin that could shake up the industry. Unlike traditional stablecoins, which are just digital versions of the U.S. dollar, his new project—Pi Protocol—will actually pay holders a yield (profit).
This yield-bearing stablecoin is set to launch in the second half of 2025 on Ethereum and Solana, two of the biggest blockchain networks. But what makes this project different from Tether, USDC, or even MakerDAO’s DAI? Let’s break it down.
Stablecoins 2.0 – What’s Changing?
The first generation of stablecoins, like Tether (USDT) and USD Coin (USDC), work very simply: for every digital token issued, there’s a real U.S. dollar (or similar asset) stored somewhere to back it up. This means they act like digital cash—stable, reliable, but not very exciting.
Then came algorithmic stablecoins like DAI, which use smart contracts and crypto collateral to maintain a 1:1 value with the dollar. Some of these models worked well, while others (like Terra’s UST) completely collapsed, wiping out billions of dollars.
Now, we’re seeing the rise of yield-bearing stablecoins. These work differently because they invest their reserves into tokenized real-world assets (RWAs)—things like U.S. government bonds, money market funds, and other financial instruments that generate passive income. This means that instead of just holding digital cash, users actually earn a return on their holdings.
Why Should You Care?
- Passive Income from Stablecoins – Instead of just holding USDT or USDC with no benefits, users of Pi Protocol could earn a yield while still having the stability of a dollar-backed asset.
- New Competition for Tether – Tether is currently the biggest stablecoin, with a market cap of $141 billion, but Pi Protocol could challenge it by offering something more attractive to investors.
- The Rise of Tokenized Real-World Assets (RWAs) – The crypto world is moving beyond just digital currencies. More projects are starting to integrate traditional financial assets into blockchain systems, making them more efficient and accessible.
- Regulatory Implications – Governments are watching stablecoins closely because they could disrupt traditional banking. A yield-bearing stablecoin backed by real-world assets might attract even more attention from regulators.
Key Players & Market Impact
Pi Protocol is not the first yield-bearing stablecoin, but it could become one of the biggest if Collins plays his cards right. Other major players in this space include:
- Mountain Protocol’s USDM – Offers a 5% annual yield from U.S. Treasuries.
- Ethena’s sUSDe – The largest yield-bearing stablecoin, with $4.5 billion in circulation.
- MakerDAO’s sDAI & BlackRock’s BUIDL Fund – Other alternatives in the growing yield-bearing stablecoin market.
With Tether earning $13 billion in profits last year from its reserve assets, it’s clear that stablecoins can be massive money-makers. Pi Protocol wants to share that wealth with users, rather than keeping all the profits for itself.
What’s Next?
The big question is: how will Pi Protocol generate its yield? Some projects make money from U.S. Treasuries, reverse repurchase agreements (repos), and money market funds. If Pi Protocol follows a similar model, it could be a major competitor in the stablecoin market.
For crypto traders, investors, and DeFi users, this could be a game-changer—a stablecoin that is not only safe but also profitable to hold. If successful, this could be the next step in the evolution of digital dollars, bridging crypto and traditional finance in ways we’ve never seen before.
Will Pi Protocol be the next big thing or just another failed experiment? The countdown to 2025 has begun.
