What Is the Stablecoin War? Who Will Win: USDT, USDC, or USDe?
There is no single winner in the stablecoin war; it is shifting from "who is the most liquid" to "who can distribute yield the best." USDT holds the top spot with its first-mover advantage and global liquidity, USDC has captured the institutional market through compliance, and USDe is blazing a new trail with "crypto-native yields." The outcome of this war won't be one out of three—instead, each will reign in its own battlefield: payments, DeFi, and compliant channels.
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Step 1: Understanding the Battlefield—Mapping the $320 Billion Market
First, let's see how big the battlefield is and who controls what. As of July 2026, the total market cap of global stablecoins has surpassed $320 billion. The market structure is highly concentrated:
| Stablecoin | Market Share (approx.) | Positioning |
|---|---|---|
| USDT (Tether) | 60% | King of global liquidity, top settlement layer for exchanges |
| USDC (Circle) | 25% | Institutional compliance choice, backed by GENIUS Act |
| USDe (Ethena) | ~2% | Crypto-native yield engine, synthetic dollar |
| Others (USDS, USD1, etc.) | ~13% | Competing for the remaining share |
USDT and USDC together control nearly 90% of the market. This means challengers are not competing against "other stablecoins," but against a payment network that has been running for nearly a decade.
What does completion look like? Remember three things: USDT is the largest, USDC is the most compliant, and USDe is the most "profitable."
Step 2: Understanding the Moat of USDT and USDC—Why They Hold 85%
The moat of USDT and USDC is not technology, but network effects. The value of a stablecoin depends on "where it can be used." USDT is the preferred settlement layer in almost all exchanges, wallets, market makers, and OTC trading; USDC captured institutional channels after U.S. regulatory clarity—in 2025, reserve interest income accounted for 96% of Circle's total revenue.
Their profit logic is simple: users deposit $1, the issuer invests the reserves into U.S. Treasuries, and keeps the interest. In 2024, USDT's profit exceeded $8 billion, and USDC's parent Circle had reserve income accounting for 96% of total revenue.
What does completion look like? Understand that the moat of top stablecoins is "widely used," not "better technology."
Step 3: Understanding USDe's Play—It's Not the Same as USDT/USDC
USDe is not a traditional stablecoin, but a synthetic dollar. Its value and yield come from crypto-native mechanisms, not cash in a bank.
How USDe maintains its peg: It uses a "delta-neutral hedging" strategy—for every $1 worth of staked ETH (like stETH) held by the protocol, it opens a $1 ETH short position on an exchange. After hedging long and short, the net exposure is close to zero, anchoring the price near $1.
Where does USDe's yield come from?: ① ETH staking rewards (LST rewards); ② funding rate payments from long positions to short positions in perpetual futures. When bull market sentiment is high, the combination of these two yields can push the annualized return of sUSDe (staked USDe) above 20%.
What are the risks of USDe?:
Funding rate risk: If the market turns bearish and short interest rises, the funding rate could turn negative, causing USDe's yield to evaporate or even become a cost.
Extreme volatility risk: During the sell-off in October 2025, USDe briefly dropped to 65 cents on Binance. Although Binance later admitted it was a platform issue, it highlighted USDe's vulnerability.
S&P "weak" rating: S&P Global Ratings assessed USDe's ability to maintain its peg as "weak."
What does completion look like? Be able to explain the fundamental difference between USDe and USDT—USDe maintains its value through "arbitrage profits," not through "money in the bank."
Step 4: The Entry Logic of New Players—Open USD (OUSD) Strategy and Controversy
OUSD is a new variable in this war. Its core strategy is to distribute reserve yield to partners, rather than keeping it all to the issuer like USDT/USDC. Minting and redemption have zero fees, and after deducting a small operational fee, all reserve interest is distributed to partners.
Controversy: OUSD announced over 140 partner companies (Visa, BlackRock, Google, etc.), but several Korean companies such as Samsung Electronics and Upbit's parent Dunamu later publicly denied having signed formal agreements. This has raised market skepticism about the "list inflation." If coalition governance and trust building go wrong, it could be a fatal flaw for OUSD.
What does completion look like? Understand that the stablecoin war is shifting from "reserve competition" to "distribution competition"—whoever can distribute yield will capture the channels.
Step 5: Real-World Judgment—Who Will Win This War?
The stablecoin market will not see a "single winner" but will form a layered landscape.
| Scenario | Advantage | Reason |
|---|---|---|
| Exchange trading / Cross-border payments | USDT | Deepest liquidity, widest acceptance |
| Institutional DeFi / Compliance channels | USDC | Backed by GENIUS Act, strongest compliance attributes |
| High-yield DeFi strategies | USDe | Captures funding rate premium in bull markets |
| Scenario-based payments / Merchant settlement | OUSD and alliance-type | If they can crack real payment use cases, they could open a new track |
Judging from recent supply changes, USDT is still minting (over $5 billion minted in one month), while USDe's supply dropped by 28% over the past month. This suggests the market still trusts "traditional" stablecoins the most, not "yield-based" ones.
What does completion look like? Be able to decide which stablecoin to use based on your capital purpose—whether you seek "value preservation" or "yield generation"—rather than following the crowd.
Common Misconceptions
"Stablecoins are 1:1 pegged to the dollar, so they're all equally safe": Not true. USDT/USDC are backed by fiat reserves, while USDe relies on crypto-asset hedging; their pegging mechanisms and risk profiles are entirely different. S&P rated USDe's pegging ability as "weak."
"USDe's high yield is the norm": No. USDe's yield heavily depends on bull market funding rates. Once rates turn negative, yield disappears or even becomes a cost.
"OUSD's 140 partners = it's a sure thing": Not necessarily. The authenticity of the partner list has been publicly questioned, and the governance efficiency of alliance-type stablecoins is a long-term risk.
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Risk Warning
Chinese regulatory authorities have explicitly classified stablecoin-related business activities as illegal financial activities; mainland residents face legal risks when participating in overseas stablecoin transactions.
USDe experienced a depegging event in October 2025; the stability of synthetic stablecoins under extreme market conditions has not been fully tested.
Stablecoin reserve transparency and auditing standards vary widely; USDT's reserve composition has long been a subject of market controversy.
Next step: First, be clear about your capital purpose—whether it is for trading, payments, or pursuing yield. If you need value preservation, USDT and USDC remain relatively safe choices; if you seek yield and can tolerate risk, you may consider USDe's staking return, but stay sensitive to changes in funding rates. Do not put all your funds into a stablecoin just because its yield is high—first understand its yield source and risk boundaries.
