Recently been seeing a trend of new payment rails and credit cards issued based on stables. Perhaps now is a good time to revisit the issues facing the sector.

Lets start with the good parts: Traditional finance is slow and expensive. A cross-border wire transfer can take days; a stablecoin transfer takes seconds.

But the true advantage is programmability. Money becomes software, unlocking capabilities impossible with legacy bank rails:

• Frictionless Subscriptions: Bypassing costly credit card processors
• Automated Escrows: Funds that release instantly when conditions are met
• Instant B2B Payments: Slashing working capital needs by settling immediately

However there are also certain disadvantages particularly from,

• Contracts can be programmed to burn users stables without consent (this is dependant on the chain. which is possible on ETH and POL – I know this having built contracts for RWA companies)
• Addresses can be blacklisted for no reason
• Keys can be lost by providers or from self custody

Not to forget the collapse of Terra in May 2022. Its “algorithmic” stablecoin, UST, had no real assets backing it. It was a house of cards propped up by an unsustainable 20% yield. When confidence wavered, the algorithm failed, erasing $45 billion and triggering a market-wide crash.

Of course, today stablecoins are much better backed and more reliable without degens yield farming to the max and stablecoin providers playing along.

The Path Forward: Building Responsibly

In any case, the era of the unregulated frontier is over. Global regulators now see stablecoins as systemically important, and the “move fast and break things” ethos is dead. For developers, survival requires building with resilience in mind:

• Vet Your Foundation: Scrutinize a stablecoin’s reserves. Audited, stable assets are not optional.
• Engineer for Failure: This is particularly for stablecoin creators. Build circuit breakers into your application. Assume a de-peg event will happen (from a hack or contract error or manipulation).
• Focus on Utility: Solve real-world problems. The apps that last won’t be the ones chasing speculative yield.