When bankers publicly talk about the risks of stablecoins, I always grin. On the sidelines, they discuss something completely different — not risks, but direct competition. Their entire business model, built over the centuries, has been threatened by a simple digital token that is always equal to one dollar.
The essence of the conflict is ridiculously simple. The bank takes your dollars on deposit, pays you a conditional 0.1% per annum, and invests them in reliable US government bonds at 4-5%. He puts the difference in his pocket. This is their bread.
And what are stablecoin issuers like USDT or USDC doing? Exactly the same thing. They take your real dollars and use them to buy the same government bonds, but they are willing to share the resulting returns with you. When a crypto exchange offers you 4% per annum on your own dollars, simply "packaged" in a token, it is not trying to deceive you. She just gives you the profit that the bank has always taken for itself. That's what scares bankers. They understand that their long-term monopoly on the "cheap money" of depositors is ending.
The big ones win, the small ones lose. How are banks adapting?
It's funny to see how the banking sector has split against this background. Small and medium-sized regional banks are panicking the most. For them, deposits from the public are the foundation of business, and they are rightly afraid of a massive outflow of capital into more profitable crypto—instruments. For them, this is a direct threat to their survival.
But Wall Street giants like Blackrock or Cantor Fitzgerald quickly got their bearings. They did not go to war with stablecoins. They started serving them. Today, they are the custodians and managers of the very reserves of government bonds that are backed by USDT and USDC. They take over all the work with these securities, receiving huge commissions from issuers. In fact, they just moved to the other side of the table and continued to earn on the same cash flow.
Next step: DeFi. Are banks not needed in principle?
But the real existential threat to banks is not even stablecoins. This is what grew out of them — decentralized finance (DeFi). If stablecoins are just a more honest competitor who takes away part of the margin, then DeFi is an attempt to build a world where there are no banks in principle.
Take, for example, credit protocols like Aave. This is, in fact, a "bank without bankers", just a program code. It works like this: some users invest their free stablecoins in a common "liquidity pool", while others take loans from this pool secured by their other crypto assets. No managers, offices, or credit committees. The code checks the collateral itself and issues a loan. And the interest paid by borrowers is automatically distributed among those who provided the liquidity.
The scale of this market has not been "toy" for a long time. The total amount of funds blocked in DeFi protocols is estimated at tens of billions of dollars. And the profitability for depositors on dollar-denominated stablecoins there often exceeds 6-7% per annum.
Why does this change everything?
That's the fundamental difference. A traditional bank is an intermediary that takes the lion's share of the profits from money management. And the DeFi protocol is a technology that removes this expensive intermediary. Almost all profits remain with the participants in the process — lenders and borrowers.
Of course, the mass adoption of DeFi is still far away, there are risks and difficulties. But the very fact that such an alternative exists makes the traditional financial system very nervous. Stablecoins were just the first call. They still play by the old rules. But DeFi is already an application for creating a completely parallel financial reality.
Opening the black box: how DeFi generates such profitability
When people see a yield of 6-7% per annum in dollars, their first thought is "this is some kind of risky scheme." In fact, the mechanics there are quite simple and conservative. If you look at the same Aave protocol, it is, in fact, an automated pawnshop.
You bring your USDC and put it into a common "pot" — a pool of liquidity. Another person who needs dollars comes and takes them from this pot. But in order to take them, he must leave a deposit — his bitcoins or ethereums, and with a large margin. For example, to borrow $100, he leaves cryptocurrencies for $150. If his collateral starts to become cheaper and approach the amount of the debt, the protocol automatically sells part of the collateral to repay the loan without any calls or warnings. The risk for those who have lent money is minimized.
The source of income is the percentage that the borrower pays for using the loan. The code automatically divides this percentage among all those who have invested money in the boiler. The Aave platform itself, as the organizer, takes only a small share.
And these are no longer "geek toys". The amounts there are serious: the Aave protocol has paid more than $1.6 billion in interest to its depositors since its launch. The volume of deposits in it is approaching $40 billion, and loans issued are almost $30 billion. This is already a full-fledged financial industry operating in parallel with banking.
Unfair Math: Why can't Your Bank do that
Why can't a regular bank offer you the same 6%? Because it has huge costs. He needs to maintain thousands of employees, rent offices, pay for IT infrastructure, form reserves at the request of the regulator and, of course, include his own profit in the rate.
The DeFi protocol is just a program code. He has no offices, no army of clerks, and no board of directors demanding dividends. Its costs are minimal. Therefore, he can afford to give almost all the interest income to those who provided the capital, that is, to you.
Moreover, the profitability of stablecoins in DeFi is often even higher than the rates at which banks lend to each other. For example, the current effective interbank rate in the United States is about 4.3%. This means that for an ordinary individual client, the deposit rate will be several times lower.
And for users outside the United States, the benefits are even more obvious. It is almost impossible to get an adequate dollar deposit rate from your local bank. DeFi, on the other hand, gives anyone with Internet access the opportunity to earn dollar returns, which are often higher than those of US residents in their own banks. This is the real globalization of finance that traditional institutions are so afraid of.
The world of DeFi and stablecoins is changing at a breakneck pace. Today, Aave is the leader, and tomorrow a new, more profitable protocol appears. In order not just to observe this technology race, but to understand which tools really work and where you can find adequate dollar returns right now, you need to be in the flow. The latest reviews, analysis of new projects and risk analysis are all in our Telegram channel.
