Collateral Beats Yield: The True Measure of Stablecoin Success

The crypto market is focused on yield-bearing stablecoins, which have grown by 300% in the past year and are expected to reach over $50 billion in market capitalization this year. However, Artem Tolkachev, chief RWA officer at Falcon Finance, argues that the industry is optimizing for the wrong metric.

Tolkachev claims that yield is an easy-to-copy and fleeting feature, whereas collateral acceptance is what truly matters. A stablecoin's ability to be accepted as collateral determines whether it can be used for trading, borrowing, and hedging, rather than just being parked in a wallet earning interest.

The GENIUS Act's implementing rules are due by July 18, which will require issuers to clear the federal bar and earn regulatory approval. However, clearing this hurdle is not sufficient to become collateral-acceptable, as it requires infrastructure work such as standardizing tokenized dollars' pricing and redemption.

Tolkachev believes that the winners of the next phase won't be the issuers who pay the most yield, but rather those whose tokens are widely accepted as collateral. This means that exchanges, lending venues, and risk frameworks must be built to treat high-quality dollar tokens as cash equivalents.