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Happy weekend, Stablescope readers!
This month, sablecoins are sending two seemingly contradictory signals: the industry is processing more transactions than ever, yet individual issuers remain vulnerable to sudden capital outflows.
Recap on the two headliners this week:
SS #145 - USD1 Sheds $400M in Two Weeks
SS #146 - Stablecoins Move $400M Every Hour
This week, World Liberty Financial’s USD1 lost approximately $400 million in circulating supply within two weeks, even as its dollar peg remained intact. Meanwhile, new research from Coinbase and The Block suggests that stablecoins now move more than $400 million every hour, with 73% of activity occurring outside US banking hours.
The contrast highlights an important distinction in the industry’s evolution. Stablecoins are increasingly proving their utility as a settlement infrastructure, but that does not guarantee sustainable demand for every stablecoin issued.
As banks, payment companies and regulators accelerate their engagement with digital dollars, the next phase of competition may be less about who can issue a stablecoin and more about who can retain liquidity, generate recurring transaction flows and become embedded in everyday financial operations.
This week’s edition examines the difference between stablecoin adoption and issuer-level success, and what that means for institutional capital.
Enjoy the read!
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The two headlines point to a maturing stablecoin market in which aggregate transaction activity is increasingly disconnected from the performance of individual issuers.
USD1’s approximately 9.1% supply contraction illustrates the vulnerability of stablecoins whose circulating supply is concentrated among a limited number of large holders. Despite maintaining its peg, the withdrawal of approximately $400 million suggests that stable reserves and functional redemption mechanisms alone cannot guarantee sustained demand.
By contrast, the reported $400 million in hourly stablecoin transfers reflects growing demand for blockchain-based settlement. The appeal extends beyond crypto trading to cross-border transfers, treasury operations and programmable payments. Yet aggregate on-chain volume does not necessarily represent equivalent growth in commercial payments, particularly when trading, internal transfers and repeated capital movements remain significant contributors.
For Onigiri, three structural developments stand out.
First, liquidity retention is becoming as important as issuance growth. Stablecoin market capitalization measures outstanding supply, but its sustainability depends on the underlying use cases and holder composition. Issuers supported by recurring merchant settlements, institutional treasury balances and payment integrations may prove more resilient than those dependent on a few large counterparties.
Second, the competitive advantage is shifting toward distribution and integration. As regulated issuance becomes more accessible, differentiation increasingly comes from banking relationships, merchant acceptance, cross-border corridors and integration into financial software. Stablecoins with established distribution may retain demand more effectively than standalone tokens competing primarily on incentives.
Third, settlement efficiency must translate into measurable economic value. Continuous settlement offers potential advantages in liquidity management and prefunding requirements. However, institutions will adopt stablecoins at scale only when savings remain compelling after accounting for conversion costs, compliance, custody and operational risks.
Major Stablecoin Issuers
Mixed
Established issuers with diversified holders and recurring use cases benefit from rising transaction activity. Concentrated issuers face greater redemption and retention risks.
Banks & Financial Institutions
Positive
Continuous settlement creates opportunities to improve liquidity efficiency, expand cross-border services and reduce reliance on correspondent banking arrangements.
Regulators
Mixed
Growing adoption strengthens the case for clear regulatory frameworks, while concentrated ownership, redemption risks and cross-border activity complicate supervision.
Corporates & Enterprises
Positive
Stablecoin payments could reduce settlement delays and working capital requirements, provided integration and compliance costs remain manageable.
Retail Users & Crypto Natives
Positive
Lower-cost remittances and around-the-clock transfers improve accessibility, although consumer protections and off-ramp availability remain uneven.
Developers & Protocol Founders
Positive
Demand is expanding for payment orchestration, compliance automation, treasury infrastructure and programmable transaction capabilities.
Institutional Investors & VCs
Selectively positive
Infrastructure with recurring transaction revenue becomes more attractive, while issuers dependent on concentrated liquidity or subsidies face greater scrutiny.
Infrastructure & Service Providers
Positive
Custodians, liquidity providers, banking-as-a-service platforms and compliance vendors benefit from increasing institutional adoption.
DAOs & Governance Communities
Mixed
Stablecoin adoption expands on-chain financial activity, but institutional participation may introduce stricter governance, collateral and compliance requirements.
The divergence between USD1’s supply contraction and broader stablecoin transaction growth reveals an increasingly important distinction between three measurements: outstanding supply, transaction volume and economically productive usage.
Outstanding supply represents the amount of stablecoins in circulation. Transaction volume measures how frequently value moves across blockchain networks. Economically productive usage reflects whether those transfers facilitate genuine commercial activity, financial settlement or treasury operations.
These indicators are related, but they are not interchangeable.
USD1 demonstrates how quickly circulating supply can contract when large holders redeem. The approximately $400 million decline was concentrated in a relatively small number of redemption transactions across Ethereum and BNB Chain, rather than reflecting a broad collapse in the token’s market price. The maintained peg suggests that redemption mechanisms continued functioning during the observed period, but it does not establish whether the remaining supply is supported by diversified or recurring demand.
At the industry level, the Coinbase and The Block study reports $891 billion in adjusted stablecoin transfer volume during Q3 2026, approximately four times the level recorded in early 2023. This indicates substantial growth in blockchain settlement activity, although adjusted transfer volume remains an imperfect proxy for payments to businesses and consumers.
The more consequential shift is how stablecoins could change liquidity management. Traditional cross-border payments often require institutions to maintain prefunded balances across multiple jurisdictions. Continuous blockchain settlement can potentially reduce the duration for which capital remains idle, allowing financial institutions to allocate liquidity more efficiently.
However, the finding that 73% of stablecoin volume occurs outside US banking hours requires careful interpretation. Much of the activity may originate from markets operating in different time zones or from crypto-native trading activity. It demonstrates that blockchain settlement operates independently of US banking schedules, but does not by itself prove that institutions are replacing conventional payment rails.
Looking ahead, stablecoin velocity and retention may become more meaningful competitive indicators than market capitalization alone. An issuer with smaller outstanding supply but consistent commercial turnover could support a more sustainable ecosystem than one whose supply is dominated by temporary institutional deposits.
For investors, this suggests greater emphasis on transaction composition, net redemption patterns, customer concentration and the proportion of volume generated by recurring commercial relationships.
Stablecoins are increasingly moving beyond their original role as trading liquidity within digital asset markets. Their emerging institutional value lies in enabling money to move continuously across jurisdictions, platforms and financial applications.
For corporates, the potential benefit is not simply faster transfers, but better control over working capital. Shorter settlement cycles could reduce prefunding requirements, improve cash visibility and enable treasury teams to deploy liquidity more efficiently. For banks and payment providers, stablecoins introduce an additional settlement mechanism that can complement existing financial infrastructure.
The distinction matters because the economics of payment infrastructure differ substantially from those of crypto trading. Sustainable adoption depends on reliability, regulatory compatibility, liquidity availability and integration with established financial workflows, rather than speculative demand for the underlying token.
The growing interest in agent-driven payments introduces another possible application. Autonomous software may eventually require programmable, low-value and continuous settlement capabilities. However, projected agent-mediated commerce should not be confused with demonstrated stablecoin demand; identity, authorization, transaction controls and dispute resolution remain necessary prerequisites.
The next stage of stablecoin adoption will be defined less by how much value moves on-chain and more by how much financial activity depends on that movement.
For Onigiri, this reinforces the investment opportunity across payment orchestration, institutional treasury management, compliant liquidity infrastructure and embedded financial services, where stablecoins function as the underlying settlement layer rather than the product itself.
**Liquidity concentration and redemption resilience.**USD1’s supply contraction illustrates how a small number of holders can materially influence circulating supply. Institutions must assess holder concentration, reserve liquidity and the ability to process large redemptions without market disruption.
**Transaction volume versus genuine payment adoption.**High on-chain transfer volumes can include trading, arbitrage, internal wallet movements and repeated transfers. The industry still needs more consistent measurements of commercial payment volume, unique economic users and recurring transaction demand.
**Regulatory fragmentation and issuer continuity.**Differences in licensing, reserve requirements, redemption rights and stablecoin rewards rules could create barriers to cross-border adoption. Changes in issuer or custodian arrangements also introduce legal and operational transition risks.
**Banking integration and liquidity efficiency.**Continuous blockchain settlement does not eliminate reliance on banking infrastructure for fiat conversion. Institutions must determine whether stablecoins meaningfully reduce total settlement costs after accounting for FX spreads, compliance, custody and off-ramp liquidity.
**Institutional operational and counterparty risks.**Smart contract vulnerabilities, blockchain outages, custody failures and liquidity provider concentration remain relevant. For financial market infrastructure, legal settlement finality and collateral enforceability are equally important.
**Sustainable monetization and competitive differentiation.**As more banks, fintechs and issuers enter the market, stablecoin infrastructure may face pricing pressure. Investors must distinguish businesses with defensible distribution and recurring revenues from those relying on temporary liquidity incentives or transaction subsidies.
Onigiri Capital (onigiri.vc), a US$50 million blockchain-focused investment fund, launched by Saison Capital, the venture arm of Japan’s Credit Saison. Onigiri Capital is on a mission to chart the next chapter of finance and invest in seed and Series A blockchain startups in stablecoins, payments, RWAs, DeFi and financial infrastructure. The fund’s strategy emphasizes connecting startups to Asia’s growing digital asset markets.
If you’d like to discuss or contribute to the next Institutional Lens, contact us at hi@onigiri.vc
Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.
