Polygon Eyes Stablecoin Market Surge as Institutional Demand Soars

Polygon Labs is looking to focus on gearing up for an expected increase in the stablecoin sector. In an interview with Gadgets 360, Polygon’s founder Sandeep Nailwal mentioned that there has been a marked rise in institutional interest towards stablecoins, prompting industry stakeholders to get ready to meet the requirements for stablecoin custody and related services. Polygon is a widely-used layer-2 scaling solution built on Ethereum, known for its low transaction fees and interoperability among other benefits. In the future, the platform intends to enhance its performance, particularly regarding stablecoins.

Stablecoins are cryptocurrency assets whose value is tethered to another asset – such as gold or fiat currencies. Tokens like Tether (USDT) and Circle (USDC) are typically less volatile due to their backing by stable, reserve assets. Standard Chartered projects that the stablecoin market may expand to $2 trillion (approximately Rs. 1,71,29,800 crore) over the next three years.

Nailwal expressed that Polygon aims to become the primary provider of stablecoin payment solutions and transactions going forward. He explained that stablecoins are attracting institutional attention as they create a link between crypto finance and conventional finance.

He mentioned that “the supply of stablecoins on Polygon’s proof-of-stake blockchain surged 14 percent in Q4, exceeding $2 billion (about Rs. 17,100 crore), positioning it as the leading EVM chain with nearly 30 percent of all application-related transactions. To promote wider adoption, Polygon introduced 1Money, a layer-1 payment network capable of facilitating multi-currency transactions.”

A recent report from a16z crypto indicated that stablecoins can enhance transaction processing speeds and add more transparency to records, owing to their blockchain foundation.

“Rather than piecing together cumbersome, costly, and outdated systems, stablecoins operate smoothly across global blockchains. These frameworks are programmable, composable, and designed to scale internationally,” the firm noted in its findings. “Establishing clear regulations for stablecoins and the crypto market structure could enable these technologies to advance from experimental stages to widespread use.”

Numerous nations are currently delving deeper into the exploration of stablecoins. In the US, the Stablecoin Regulation Bill is nearing approval from the US House Committee. Both Singapore and the UK have frameworks in place regulating the use of stablecoins.

In the months ahead, Nailwal noted that the blockchain company will provide support for yield-bearing stablecoins that blend the stability of traditional collateralization with DeFi yields.

Nailwal spoke on the current excitement surrounding stablecoins, stating, “There is significant revenue potential with stablecoins, as institutions observe the proven profitability displayed by established players like Tether, and they are eager to leverage the opportunity to offer improved payment systems for their clients, particularly for remittances, while steering clear of traditional fee structures.”