There is actually only one core element of a stablecoin, that is, the network scale. The network scale can be observed by the following three factors:
1. Number of addresses holding coins
2. Issuance scale
3. Organic application scenarios: Organic application scenarios refer to protocols and scenarios that are willing to access it without subsidies. Using subsidies alone, or using stablecoins simply for mining income, does not belong to organic use scenarios.
The importance of these three factors is ranked as follows: 3>1>2
Why is the issuance scale the least important? Because the issuance scale can attract capital inflows through token mining subsidies and quickly increase the scale (see the algorithmic stablecoins and luna-ust in the previous round for examples).
Why is the organic application scenario the most important? Because there is a scenario, users will be willing to hold this stablecoin without mining subsidies, which means that the liquidity cost of this stablecoin is very low, and a large operating scale can be maintained with very small operating costs.
The moat of USDT, USDC, and DAI comes from this. They almost do not need their own stablecoin liquidity to subsidize, and even enjoy free subsidies from other stablecoins.
However, USDE now lacks organic application scenarios, and the main purpose of users obtaining it is mining.
In addition to staking to obtain funding rates, another scenario is to realize the expected ENA points on Pendle, which is equivalent to using the ENA currency price to stimulate users to buy USDE in disguise.
This is actually similar to other stablecoin projects, that is, using project tokens to stimulate the issuance scale of stablecoins, and walking the spiral of stepping on the left foot and the right foot.
This type of model is quite high when the currency price rises, and it is also prone to negative spirals when the currency price falls.
Enter the cycle of currency price falling → expected points falling → USDE YT price falling on Pendle → PT price falling → USDE yield falling, mining subsidies reduced → scale growth stagnant → currency price expectations deteriorating, and continued to fall.