Original author | Nathan ( @proofofnathan )
Compiled by | Odaily Planet Daily ( @OdailyChina )
Translator | Dingdang ( @XiaMiPP )
Editors note: Since Circle announced its listing, an invisible boundary in the stablecoin market has been officially drawn: USDC and USDT have begun to take two different development paths. With compliance and transparency as its core, USDC has gradually embedded itself into the U.S. financial system and become a permitted dollar serving institutional users and financial technology scenarios; while USDT, relying on its extensive on-chain liquidity and deep market foundation, continues to play a key role in global transactions, payments, and asset hedging scenarios.
This difference actually reflects the different priorities of value realization of stablecoins in different markets. For some users, compliance and programmability are crucial; for others, liquidity, accessibility, and permissionless usage experience are the top priority. Therefore, we need a new cognitive model to understand how different types of users realize value through stablecoins. This is exactly what the Hierarchy of Stablecoin Value Realization is about.
Although everyone benefits from stablecoins in different ways, ultimately these benefits come from four core value propositions: low cost, high speed, no permission required, and programmability.
The original author Nathan explained in another article The What and Why of Programmable Money : Programmable money is money that can set behavioral logic like code. It is a stable currency and the fuel of smart contracts. It can set: when, why, and how to transfer money. And all of this no longer depends on banks, no longer depends on trust, but only on the code itself.
These four value propositions correspond to four core usage scenarios: storage, payment, transfer, and income .
The Hierarchy of Value Realisation is a new cognitive model that explains what different types of users value most in stablecoins.
This article will focus on two user groups: people who need stablecoins and people who dont need stablecoins so much , namely: emerging market users and Western market users.
Two major user groups of stablecoins
Simply put, in emerging markets , stablecoins are building a new financial infrastructure; in Western markets, stablecoins are more of a supplement and are integrated into existing financial technology (Fintech) and traditional financial systems (TradFi).
This rule is widely applicable to both emerging stablecoin projects and established players.
Based on this, we can outline different value realization levels for the two types of users respectively.
1. Value realization levels of users in Western markets
The Western market mainly corresponds to the Global North countries: they are politically stable, have a developed financial system, and most people have bank accounts and can earn interest on their savings.
In these markets, “ programmability ” is the core driver of stablecoin innovation. This is similar to the explosion of the Internet, iPhone, or smart contracts: programmability brings new financial innovation, and financial innovation is what the Western world loves and excels at.
The second is “ speed ”. The settlement speed of cross-border or local payments has long been an important challenge in the Fintech field. Settlement delays consume liquidity and bring opportunity costs, so it ranks second in Western markets.
“ Cost ” ranked third. Although reducing transfer costs is a major attraction of stablecoins, transaction fees in Western markets are not high, far less than the outrageous $115 fee for a $200 remittance in emerging markets.
“ No permission required ” is the least important in Western markets, as the vast majority of people already have bank accounts and can easily pay with cash or transfers, so they don’t need to rely on stablecoins to obtain financial services.
Therefore, Circle and USDC have more advantages in the Western market. As a company that is essentially fintech-oriented, Circle emphasizes programmability, low cost and efficiency, which are in line with the usage preferences of Western users. Today, more and more Western companies choose to develop based on USDC when building stablecoin solutions.
In addition, yield has gradually become an additional concern for Western users. Since they are accustomed to earning interest from bank deposits, they will question why they cannot earn similar returns by holding stablecoins.
This is completely different in emerging markets, where users are more concerned about the currency stability brought by stablecoins, especially the ability to obtain US dollars, rather than the returns.
According to the author: In fact, yield has never been a decisive factor in the success of stablecoins in these markets. As industry analysts point out, the reason why USDT has become the worlds most liquid stablecoin is that it does not need to distribute treasury bond returns to users, and it can dominate with its strong accessibility and deep liquidity foundation. For many users in areas with high inflation or capital constraints, avoiding the risk of local currency depreciation is far more realistic than an annualized 3% interest. They are more concerned about: Can I safely convert my assets into US dollars, can I transfer them at any time, and can I use them locally.
Therefore, in these areas where there is real product-market fit, the liquidity of stablecoins is far more important than profitability . Liquidity tends to be concentrated, eventually forming a network effect for the top stablecoins. This is why stablecoins like USDT can still be widely adopted around the world even if they lack a profit mechanism.
2. Value realization level of users in emerging markets
Compared with the West, emerging markets (the “global South”) have relatively weak financial foundations, widespread and severe local currency inflation, and low banking service penetration.
The emergence of stablecoins allows users in these regions to freely obtain, transfer and use stable currencies such as the US dollar for the first time, which was unimaginable in the past.
Therefore, permissionless is the core and most transformative value proposition for users in emerging markets. Whether or not they have a bank account, users can directly access the US dollar system, thereby unlocking financial freedom.
The second is low cost. In emerging markets, cross-border remittance fees remain high. For example, when a father sends money home to support his family, the handling fee may eat up a large part of the transfer amount. Stablecoins greatly reduce this remittance cost.
The third is speed. The current cross-border transfer system is inefficient, and it often takes days or even weeks for funds to arrive. Stablecoins can achieve transfers in seconds, solving the life and economic difficulties caused by delayed funds.
Finally, there is programmability. Although this value proposition also has a profound impact on emerging markets (such as unlocking insurance, lending, contract payment and other services), its perceived value in the short term is slightly lower than the first three.
In summary, Tethers USDT shines in emerging markets. Tether provides critical financial services to millions of people without bank accounts through freely usable, widely accepted and highly liquid USDT. Its success is precisely based on the realization of these basic value points.
Summary
Circle is adapted to the Western market because it better fits the needs of fintech companies;
Tether serves a wider user base, especially those who truly rely on stablecoins.
In other words, Circle wins in terms of “tool attributes” and Tether wins in terms of “survival needs”.
