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What is starting to emerge is the corporate stablecoin market. Meta, formerly Facebook, made huge news years ago with its plans for a stablecoin. That caused a great deal of backlash, so the plan was eventually killed.

Since that time, we saw a few smaller players enter. At the top of the list is PayPal with their PYUSD token. This is the start of what I think is going to be a much larger trend.

We now have reports that another corporation is about to get involved.

Sony Issuing A Yen Backed Stablecoin

Sony is looking at the potential of having its own stablecoin, backed by the Yen. This would likely mirror what PayPal did but using a different currency.

This trial is expected to last a couple months. The company is trying to navigate through the Japanese legal environment. It is using Polygon as the test network.

If successful, it will be implemented throughout Sony's different business entities. We know Sony is interested in become a player in the blockchain world, as evidenced by its announcements regarding things such as gaming.

A stablecoin would only further this connection, bringing utility to the users who are entering this ecosystem.

Corporate stablecoins

In my view, we are going to eventually hundreds of corporate stablecoins. This is a process that will only accelerate. companies are going to create then, most likely being asset-backed, for use in their systems. Odds are they will have little utility outside of that.

Of course, this will be the realm of the larger entities. While anyone can create a token, it makes little sense for smaller entities to pursue this. Here is where using some of the other established stablecoins makes sense.

One of the reasons why company's will look to do this is because of the money it can make. Using PayPal as an example, each dollar paid in to create PYUSD is backed by a U.S. Treasury (or most of them are). This asset pays interest to the holder, in this case PayPal. Right now the 1 month T-Bill is paying 5.363%.

According to CoinGecko, there are near 200 million PYUSD available. This means the company is pulling in almost $10 million just to have a token that users can send across the platform.

That isn't a bad deal for PayPal.

When you think about it, the numbers are the screen that are being moved around do not matter whether they are USD or PYUSD. The difference is where the assets actually reside. With the stablecoin, the tokens are in individual wallets and the asset in PayPal's account.

For an entity that dealt in finance, it might not be a big switch. For a consumer electronics company, this is a major windfall. What is Sony was able to duplicate what PayPal did? This is found money.

In addition to the profit potential, we also could see branding and marketing benefits. Having a stablecoin helps to market. It opens up a host of opportunities to get people involved. For example, the coin could be used similar to a coupon. Sony could airdrop the coins to people as a way of trying to get them involved in the ecosystem. Depending upon how they structure it, this could be used for Sony products.

Algorithmic Stablecoins

To me, the future payment vehicle is algorithmic stablecoins. This sends the regulators (and Elizabeth Warren) off the deep end but not matter.

The challenge with asset backed stablescoins is the need to custody. Here we see counterparty risk arising. The regulators believe this adds to stability but the reverse is actually true. On a daily basis, the risk is minimal. However, we see enough black swans cropping up periodically to know that when things blow up, it is devastating.

Asset backed stablecoin are still operating within the same system. We are see the banks at the center of this. This is really nothing more than an extension of the money supply that is created by the different commercial banks.

When we look at algorithmic stablecoins, we see a move outside the banking system. Instead of someone coming to the company with a dollar (or Yen) which ends up in the bank, the algo stablecoin is created by the blockchain. There is no fiat currency, or assets tied to it, involved. Instead, the value of another blockchain based asset is shifted from one coin to another.

Here is where, in my opinion, we get into the open versus closed debate.

Corporations are not going to get involved in algorithmic stablecoins. Regulation will not allow it. This is going to be the realm of the decentralized world.

The next piece of the puzzle is Sony versus any blockchain. If we look at an ecosystem such as Hive, how does that stack up to Sony as an example? Right now it is no comparison but, as we shift deeper into Web 3, it is likely to dwarf the company. We already see how Ethereum does this to most companies.

As these ecosystems grow, the volume is going to necessitate even more money to fund the economic activity. This means more stablecoins will be required.

What does that mean to a stablecoin tied to something like Hive? This is a coin that is agnostic in the sense it is not tied to any company. That means the reach will flow to all aspects of the ecosystem. How does that differ from PYUSD or whatever Sony brings out? Those will likely only be used on those systems.

To frame it another way, why would anyone use PYUSD outside of PayPal? If in this situation, why not use USDC or USDT? We know the answer to that.

Therefore, I think these corporate stablecoins will be limited in scope as compared to some of the others. We are going to see blockchain ecosystems grow larger than most companies.

Blockchain Ecosystems

Most like to compare the market capitalization of Bitcoin to companies. We see the memes out there that people promote.

This, in my view, does not capture the essence of what is taking place. When it comes to economic productivity, it is not Bitcoin that is the epicenter of this for Web 3.0. It is Ethereum.

Therefore, it is best to look at that.

Right now, there is a market capitalization on ETH of around $400 billion. How does this compare to major corporations.

According to Groq, here are the companies with a market cap over $400 billion.

1. Apple Inc. (AAPL) - $2.3 trillion
2. Microsoft Corporation (MSFT) - $2.1 trillion
3. Saudi Arabian Oil Company (Saudi Aramco) (2222.SR) - $2.0 trillion
4. Alphabet Inc. (GOOGL) - $1.3 trillion
5. Amazon.com, Inc. (AMZN) - $1.1 trillion
6. Meta Platforms, Inc. (FB) - $550 billion
7. Tesla, Inc. (TSLA) - $530 billion
8. NVIDIA Corporation (NVDA) - $430 billion
9. Visa Inc. (V) - $420 billion
10. Johnson & Johnson (JNJ) - $410 billion

Naturally, there is no base layer stablecoin for Ethereum. We saw layer 2 tokens created for this purpose including the aforementioned USDC and USDT.

The point is the Ethereum ecosystem is likely going to be larger than any of these companies. In fact, there will probably be many blockchain networks that follow suit.

Another factor we have to consider is that, through wrapping, we can see how the tentacles of these tokens can be seen elsewhere. USDC is not only utilized on Ethereum.

Ultimately, we are going to see trillions in stablecoins issued. In a digital world, where the limitations are basically bandwidth, the economic productivity tied to this arena can explode. Things move a lot faster when we exit the "world of atoms".

Posted Using InLeo Alpha