# Evolution of Stablecoins - Aleksandar Matanović | ECD - Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community) - Date: 2025-10-07 - Duration: 27:24 - Topics: People & Blogs - Watch: https://streameth.org/watch/yt--qidz1ENc4s - YouTube: https://www.youtube.com/watch?v=-qidz1ENc4s ## Description Evolution of Stablecoins - Aleksandar Matanović | ECD ## Transcript Hello everyone. Um, okay. Stable coins uh may not be the most interesting topic definitely because uh you cannot make too much money uh from investing in them because they don't go up in value. actually they sometimes they go down when the when the stable coins are not uh designed the way they were supposed to as we as we saw it's already two years ago with with Luna and their their stable coin but uh today I want to talk with you about the the evolution of stable coins and start uh well way before uh actually Bitcoin and blockchain appear because the idea of of stable coin is is uh all at least few decades. Basically with the with the rise of the internet, uh okay, this is just briefly the agenda. Uh with the rise of the internet, uh the the need appeared for for for money to move as quickly as the information. Uh some might say, okay, but we already had credit cards and payments were basically instant. Uh yes they were but uh with uh several very important limitations. Uh first of them would be uh the fact that um they were not available for anyone to use because there were parts of part parts of the world which were unbanked. Some of them still are. And also if you want to uh to send money from person to person not uh not uh B2C then uh uh credit cards are really not an option and also although the payments are u they appear to be instantaneous it actually takes a lot of time for settlement to happen. So the merchant uh sometimes has to wait for days or even for weeks to to get their money to their bank account. Uh so it wasn't as convenient. it was as it was supposed to be. So people people were searching for the way to to move money quickly uh around the internet uh without needing to rely on the necessarily rely on the existing financial infrastructure and there were some ideas uh that were not uh that were not that successful in the early days. I think it started already in 1980s and uh there was some experiments. I I think uh the first uh the first um important one was digic but it uh didn't um didn't um didn't find a way to to get to enough customers and to to get some uh some um some traction. Uh basically uh the first one that uh ah just to sorry I forgot to mention that uh stable coins have uh risen from an idea to somewhere around uh $250 million in market cap. Uh most of that market cap is Tedar but it's not the only important player in the field. And uh you can see here that uh most of the rise has actually happened in the in the last four years although Tedar itself exists since 2014. But before we uh we talk more about Tedar I just want to go to uh to give you some historical perspective on the first uh relatively successful experiments regarding stable coins. And I uh I will start with e- gold for two reasons. One is subjective and one is objective. The subjective reason is that uh it was the first internet money that I was using. And the objective reason is that it was uh really the first one that was uh relatively successful. At some point early in this century, it had over 5 million users, which was quite impressive back then because you have to you have to have in mind that uh most of the people were still not using internet at all. So uh it's not like having 5 million customers now. Uh having 5 million customers 20 years ago was uh way more impressive that happening now. So it was basically like a like a centralized cryptocurrency. That's uh how we can um how we can understand it in today's world. It was uh founded in 1996 and it was as I said the first uh internet money that I used myself. Why did I have to use it? Well, because uh when I started using internet, it was like 999, uh Serbia was still under under sanctions and it was uh difficult to to pay anything from Serbia using card payments. Even if you had a card, the most of the websites uh didn't accept card payments from Serbia. So, we need to we need to search for for an alternative. And the alternative that I found was E-old. Obviously it was not u nearly as uh widely adopted among merchants as credit cards were. Uh so there were very few things that you could pay directly directly with e- gold. But uh when there is a need there is always a way there were a lot of services that actually offered you to pay anything you wanted with e- gold. uh how it worked basically you just uh send them e- gold and they pay on your behalf whether uh with the credit cards or with PayPal or something else. And another another interesting thing uh about e-old is uh that it was u let's say the first digital gold. Uh bitcoin is mentioned today a lot as digital gold but e-old was actually pegged to gold. So when you uh when you transfer some funds to your e- gold account uh those funds get converted in gold and then your balance would change as the price of of gold would change. They were claiming that they had uh um all the funds fully backed by physical gold. It turned out not to be the truth, but that's what you often get with u with centralized services which are not on blockchain. So you don't have that kind of transparency. And um uh the the convenient thing about them is that uh you were able to open any gold account from anywhere in the world. So uh they resemble the crypto in that way. The only thing you would need is email address. They were not asking you for for your name or or anything. You just open an account with email address and you have your Eagle account. You have your Eagle account and you can move the funds any way you want. There were also a lot of exchanges where you could buy or sell e- gold for real money. There were also uh other services which I was mostly using back then like uh you were you were able to buy u peer-to-peer using uh maybe western union or bank payments or moneygram and there were a lot of people actually from from countries uh with a lot of unbanked population. So one of my favorite uh trading partners from back then were from Ivory Coast which is very which was very interesting. And uh at some point in 2007, I decided to to open Eagle Exchange here in in Serbia. And basically it has been my my mission since then to to make uh to make money available for everyone. Uh E-old experiment didn't end well. uh it ended in uh 2009 with um co with founder being arrested for uh illegal money transmitting or whatever the charges were. Uh there were some other services like Liberty Reserve which I also mention here. But u after EA gold collapse none of them really uh really managed to uh to get to that number of customers because uh people generally lost uh lost um belief in that kind of concept. So they thought okay it's just a matter of time before that other one collapses too which happened uh several years after that. Uh so fast forward a few years and uh we have uh in 2009 obviously the the launch of Bitcoin and then uh the other cryptocurrencies that follow the first uh first big exchanges and those exchanges were basically the the next step kind of in in evolution of stable coins because in those exchanges uh you you were able to transfer your USD the balances to other customers. So, uh, you deposit some money to to Mount Gaus, which you all probably heard of, and then you can, uh, create, uh, USD code and send that code to a friend. And, uh, the friend can redeem the code and basically you transfer USD balance from one MGO's account to another. Then the other exchange is also uh, followed up on the same idea like Bitstamp, like BTC for example. So they uh they basically allowed you to move uh to move funds easily within their ecosystem. The problem was that you were not able to move those funds outside of their ecosystem. So there were uh really big differences sometimes between prices of of Bitcoin between exchanges. Uh there were situations where, for example, you would have uh Bitcoin priced at uh $1,100 in Bitstamp and $100,000 on Mount Gaus, which is impossible today because uh the arbitrage the arbitrage is much more efficient. But back then it was very hard to move uh to move dollars between exchanges. So there were big uh differences in prices. Then again uh there were some services uh which enabled you to exchange one USD code for another. So for example you swap your uh mount go USD code for bitstamp USD code but uh those differences in prices were priced in in those swaps. So you were not able to uh to swap them like one for one. it was if if uh the price of uh bitcoin on mount go was 10% higher then uh that code would be um 10% more expensive when you swapped one co what one code for another uh then finally we uh we get to the real stable coins first one of them and still the biggest one is uh tedar is actually very old um it started in 2014 14. And the fun fact is that it started on Bitcoin blockchain, which probably explained uh why it took it so why it took it so long to to become popular because uh Bitcoin blockchain especially back then wasn't really convenient for uh for building any kind of tokens uh stable coins included. Uh they also rebranded themselves. uh their old name was uh Realcoin and uh at some point they they started uh using uh other blockchains and uh just to go a few slides back. It was really in uh well late 2017 when they when that line starts to move from the bottom and in 2021 the the whole uh stable coin market exploded. Okay. So, uh the evolution of Tedar was followed by many controversies. Uh there were times when people were questioning whether they really have enough money to back uh to back up the the tokens that they have issued and the first few times when that question pop popped up uh the peg was lost. So it fell to let's say 0.95 or $0.9 per tedar. And uh with time people got used to that. So now when now when someone says okay Tedar is not really fully backed no one no one cares anymore. It doesn't lose doesn't lose its peg. There was there were there were also talks that uh especially in 2017 when uh we had the huge bull market that they were manipulating the price of uh of Bitcoin. Uh they were like issuing a lot of tether then they would buy tether pump the price up then when the price goes up they sell it uh for profits but uh I don't know if that that is true or not. Uh anyway they're still alive. very big, very important and basically stable coins have changed uh have changed the cryptocurrency landscape in in several ways. The first important change that they made is that uh it probably um it they probably killed the opportunity for any other crypto to become uh widespread u payment methods because all the other cryptocurrencies that are not stable coins lack that price stability. And uh when stable coins appeared, whoever was doing payments in crypto um basically moved to stable coins. There were still some people using other cryptocurrencies as payments, but uh it's really not that widespread that I don't see in a foreseeable in a foreseeable f future that trend changing. Uh the other thing is that they made markets much more efficient because uh now it's possible to move dollars or something like dollars uh very quickly across different exchanges. So any any opportunity for arbitrage is used very very quickly not like in old days. I mentioned some examples with uh prices on mount go and bit stamp being like very different 10 10% difference. There were more extreme examples uh like uh when uh when the popularity of Bitcoin uh really exploded in late 2013, there were times when uh Bitcoin would be like 50% more expensive in China than in the rest of the world. So you had Chinese exchanges when where Bitcoin was trading for $900 and then on Bitstamp it would trade for $600. But there was no way to move money from one exchange to another and use that opportunity to to make uh to make easy profits. Uh as I said uh besides Tedar there are also some other important important stable coins. Maybe the the most important one would be u USDC and D unlike uh tether which has uh let's say questionable reserves and has have it for for all its history uh USDC is uh definitely fully backed by US dollars which turned out uh to be uh maybe a weakness few years ago when the bank uh which had their dollars had collapsed and for some for I think for a few days USDC lost the peg because uh there was not clear if uh customers of that bank would be redeemed or not but then uh Federal Reserve stepped in and they said okay whoever held funds in that uh bank they will get their money back so don't worry and uh the peg was recovered but uh just Uh just a warning for all of us that uh if some u if some project whether it's a stable coin or something else is fully backed by money in the bank account it doesn't mean they're 100% secure. I u I actually like the idea behind D much more uh because they are over over collateralized and they don't depend depend on any centralized party. I know that D is not uh nearly as popular as uh USDC and especially Tedar but in terms of uh if in of technological evolution I definitely consider them as a next step after after Tedar and and USDC. So maybe uh just to summarize a little bit because Philip has warned me that there are few minutes left. uh this is the this these are some uh four phases of of the evolution of stable coins. So first one were uh a lot before uh bitcoin and blockchain like the attempts to make uh global digital money but those were all centralized uh companies and that was their weakness. Then we had uh stable coins which were uh connected to exchanges who were issuing them but you were able to move them only within that exchange. And finally with with tether we have a stable coin which uh can be used anywhere. And then u that evolved uh additionally with uh with um appearance of USDC and especially D is in my opinion technologically superior product. Uh so as I said at the beginning, stable coins are very important in today's crypto landscape uh because of the liquidity they provide because of the they made markets much more efficient and uh they they work uh they work much better now. So the prices uh balance themselves very quickly very quickly quickly between exchanges. They're also used for remittances. they use for payments much more than any other crypto. Uh there are now different different paths that um different stable coins are taking and um it also depends on the regulatory framework in different countries. As we could see uh in the recent months uh different countries or different regions have taken different paths. For example, uh European Union is uh not in a good track regarding uh stable coins and crypto in general. Uh the the requirements they uh they put on stable coin issuers basically kicked uh Tedar out of European Union. But uh it seems that it didn't influence uh USD ted market cap too much and that uh uh European Union is not a market that is strong enough to to have a meaningful influence in the crypto market. On the other hand, uh US uh US is embracing stable coins and everything cryptoreated. So probably projects will will have a heavier presence there and uh we'll be moving there if uh if necessary. We will see. There are some other spots uh other hubs popping uh popping around the world. Dubai has been especially interesting the last couple of years. They're also trying to attract a lot of a lot of different projects and uh they're succeeding in in in that. Basically, uh stable coins probably have the the bright future as long as uh US dollar remains the uh the dominant uh currency. We will see how long with that last but u uh for now it seems that they are a very important part of the the whole ecosystem and that the the today crypto ecosystem would probably not be imaginable without stable coins. >> Let's just wrap up. >> Okay, that's it. I I have one more slide. You said that's and uh some time for questions. Perfect. Perfect. Thank you. So yeah uh let's start with the Q&A session. Please raise your hand if you have any and our uh yeah okay thank you for your presentation. Uh I have a question. Uh should the stable coins uh provide some uh profits to you for holding them? Because for example, if you holding dollars or euros, you can park it overnight and uh with tethers, it's much harder to do right now. Well, I I don't think it's harder. I think it's actually easier because there are many ways you can earn yield or you on your stable coins, many services that offer that option. You can you can use centralized services for that. You can use uh platforms like uh landing platforms like a for example. Uh you can use u defy saver if you if you need additional information about how to use them for to to earn uh to earn yield on your stable coins there there there's a team. Yes. So it's actually very easy to I would say it's easier to maybe it's technologically a bit uh a bit more complicated but um it's like it takes few minutes to stake or unstake them unlike uh the bank where you have to you have to deposit the money then you have to if you want to to have any any meaningful yield then you have to basically lock lock the funds for a certain period of time and uh with stable coins means you just um you just uh stake them and uh there are periods uh when you can get a really good yield when the market is uh active. I'm not I'm not talking about uh for example Luna and 20% that they were offering but uh they're real uh so to say real stable coins which in period of high network activity can offer up to 10 15 even higher yield. I mean it doesn't it doesn't uh last for too long. You you cannot get the whole year of 15% heal but there are periods when you you can get like 10 15% for for weeks. Okay. Any more questions? We have a hand there. How do you see stable coins um in maybe not so distant future when dollar uses its losses its primacy? Do you think stable coins for other currencies will just pop up and do what these guys are doing now? Uh well well I I would agree that uh stable coins um especially USD stable coins superiority uh is dependent on superiority of US dollar in uh in traditional uh finance. So if if there is a crisis with with dollar which there are there are some potential signs of it. Uh you can you can question whether stable coins like tether or USDC are still uh are still as important as they are. But I think the concept is u is here to stay because uh throughout the history we were we were always trying to to peg whatever money we were using to something. Before uh before dollar it was gold. So uh after dollar there will be something maybe it will be bitcoin maybe it will be gold again but in digital form maybe it will be some I don't know bricks currency or whatever. But uh we have uh we have the the need to have a universal unit of account because uh the world is is connected and uh it's much easier when we all use the same the same unit of account the same way that we we can understand each other by all using English language also although it's not obviously a mother tongue for for all of us. So I think uh we will just move to whatever whatever we uh we consider a new like new standard for for stability a new new global unit of account stable coins would just adopt and they will be back to something else. >> Thank you. >> Okay we don't have any more time for new question. Let's let's let's make some time. Okay. >> Okay. Um like uh if stable bonds are supposed to be globally like available, did it ever have any kind of restrictions at which currencies can be used to buy stable coins? And if not, like why? >> Well, not not that I know of. I mean there there are countries where it's probably illegal to to buy uh to buy stable coins or any other cryptocurrencies but it doesn't mean they that people don't find a way to buy them. So um maybe it's illegally impossible but uh in practice it's not impossible anywhere. Um but like I meant if that currency that someone is trying to use is not really stable at time if it is like time of crisis or anything is it possible to use it to buy and well as long as you have someone who will accept it. Uh yes, it's possible and that volatility is usually priced in. For example, if you would like to to uh buy USDT with dollars, you could probably get an exchange rate which is close to one. But if you want to buy with uh some currency which is inflated on daily basis, someone would definitely be willing to sell you, but they will probably charge very high fee because of the volatility risk. So there's always uh there's always someone who is willing to sell if willing to sell if the price is appropriate. >> Thank you. >> Okay. Uh thank you all and let's give a big applause to Alexander. Thank you.