Why Stablecoins Matter for Payments, Remittances, and E-Commerce
When I think about cryptocurrency, I immediately picture those wild price swings that make Bitcoin look like it's on a permanent roller coaster—which is great if you're trading but not so much if you're trying to buy coffee or pay rent. While Bitcoin and Ethereum represent genuine technological breakthroughs, their tendency to fluctuate by double digits on any given day makes them less than ideal for the mundane business of actually spending money.
This is where stablecoins come in as the pragmatic middle ground between crypto innovation and financial sanity. They're quietly becoming the plumbing of the digital economy, powering everything from international remittances to e-commerce payments without the drama of watching your grocery money lose 20% of its value overnight.
I'm going to walk through what stablecoins are beyond the marketing hype, how they manage to stay stable when everything else in crypto is bouncing around, why they're reshaping how we think about payments and how you can use them on platforms like VALR.
What Are Stablecoins and How Do They Work?
A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset. This asset is typically a major fiat currency, like the USD, but it can also be a commodity like gold, a cryptocurrency, or a basket of multiple assets. By tying their value to a less volatile asset, stablecoins aim to offer the best of both worlds: the transactional efficiency of crypto without the significant price swings.
To maintain their peg, stablecoins use various mechanisms depending on their design. The most common types include:
Fiat-Backed: These are the most prevalent type. For every stablecoin issued, the issuer holds an equivalent amount of fiat currency (or cash equivalents like short-term government debt) in reserve. This 1:1 backing ensures that each token can, in theory, be redeemed for one unit of the underlying currency.
Commodity-Backed: These function similarly to fiat-backed stablecoins, but the reserves are held in physical commodities. For instance, a gold-backed stablecoin would be collateralised by gold stored in a vault.
Crypto-Backed: These stablecoins are backed by other cryptocurrencies. To account for the volatility of the crypto collateral, they are typically over-collateralised, meaning a greater value of crypto is held in reserve than the value of the stablecoins issued. This process is managed transparently on-chain through smart contracts.
Algorithmic: This type of stablecoin uses complex algorithms and smart contracts to manage its supply, automatically increasing or decreasing the number of tokens in circulation to keep the price stable. These are generally considered the riskiest type as they are not backed by any external collateral.
Why Do Stablecoins Matter: Exploring Their Key Use Cases
Stablecoins are more than just a tool for traders to hedge against volatility; they are powerful instruments revolutionising how money moves globally. Their importance stems from a combination of stability, speed, cost-efficiency, and global reach, unlocking a variety of real-world use cases.
Here are some of the key ways stablecoins are being used today:
Cross-Border Payments and Remittances: Traditional international transfers are often slow and expensive, involving multiple intermediary banks and high fees. Stablecoins enable near-instant, low-cost cross-border payments directly between parties, 24/7, making them a lifeline in emerging markets and for remittance corridors where local currencies may be unstable.
A Gateway to Crypto (On/Off-Ramps): For many, stablecoins serve as the primary entry and exit point for the broader cryptocurrency market. Traders often convert fiat into stablecoins to interact with crypto exchanges and DeFi protocols and then convert their gains back into stablecoins to secure profits without leaving the digital asset ecosystem.
E-commerce and Digital Payments: Stablecoins offer a practical way to pay for goods and services online. Merchants can accept a stable digital currency without worrying about price volatility, and consumers benefit from fast, secure transactions. This is driving a new wave of adoption in the e-commerce sector.
DeFi and Yield Generation: Stablecoins are the lifeblood of the decentralised finance (DeFi) ecosystem. They are used extensively for lending, borrowing, and providing liquidity on decentralised exchanges (DEXs), often allowing holders to earn attractive yields on their stable assets.
Stablecoins in 2025: Growth, Key Players, and Real-World Integrations
The stablecoin market has seen significant growth, with the total market capitalisation of USD stablecoins increasing by 21.05% year-to-date, from $203.361 billion on January 1, 2025, to $246.172 billion by June 10, 2025. This expansion highlights their growing role in both the crypto and traditional finance industries.
The market remains dominated by a few key players. Despite facing delistings on exchanges in Europe due to the enforcement of the Markets in Crypto-Assets (MiCA) regulation, Tether (USDT) continues to be the top stablecoin with a market cap of $155.2 billion. It is followed by USD Coin (USDC), with a market cap of $61 billion. A notable development in 2025 has been the rapid rise of Ethena's delta-neutral synthetic dollar, USDe. Its market cap has surged to $5.87 billion, surpassing the long-standing crypto-backed leader, DAI, which holds a market cap of $5.36 billion as of June 10.
Other key players include:
World Liberty Financial USD (USD1): A stablecoin with ties to the Trump family, aiming to integrate with various payment ecosystems.
First Digital USD (FDUSD): A programmable stablecoin backed by high-quality reserves, gaining popularity on major exchanges.
PayPal USD (PYUSD): Issued by the payments giant PayPal, this stablecoin is designed for seamless integration into its vast global network for payments and transfers.
This growth is fueled by increasing real-world integrations. For instance, major financial institutions like JPMorgan Chase, Bank of America, and Citigroup are reportedly exploring a stablecoin consortium to streamline cross-border payments. In the corporate world, ridesharing giant Uber is studying the use of stablecoins to reduce international transfer costs, while financial services company Société Générale has launched its own dollar-pegged stablecoin, USDCV, on the Ethereum and Solana blockchains.
In terms of retail users, stablecoins come in handy for a wide range of use cases, such as remittances, hedging against local market risks, and mitigating the inflation of national currencies. These utilities are especially important in emerging markets, like in Latin America, where citizens often have to deal with unstable governments and hyperinflation.
How to Buy and Use Stablecoins on VALR
VALR offers a secure, user-friendly, and regulated platform to buy, sell, and use a variety of leading stablecoins like USDT and USDC. You can also utilise VALR Pay to send stablecoins to friends and family instantly and without fees, making it perfect for everyday payments.
Here's how you can get started with stablecoins on VALR:
If you don't already have an account, register one on VALR and complete the identity verification process.
Fund your account with fiat currency or crypto.
Use the Simple Buy/Sell feature to instantly purchase stablecoins with your deposited funds. Alternatively, use our Pro Trading interface to place more advanced orders on pairs like BTC/USDT or USDC/ZAR. You can learn more about order types here.
Once acquired, you can use your stablecoins on VALR Pay for instant and free P2P transfers, send them to an external wallet, use them to trade other cryptocurrencies or lend them to earn yield.
How to Earn Yield by Lending Stablecoins on VALR
Beyond simply holding or spending them, you can also put your stablecoins to work by earning yield through VALR's lending feature. This allows you to grow your assets passively by lending them out to other users on the platform.
Here's how to start earning yield on your stablecoins:
After logging into your VALR account, find the "Earn" section.
Choose the stablecoin you wish to lend (e.g., USDT or USDC) from the list of available assets and click "Lend."
Specify the amount of the stablecoin you want to lend and your desired annual percentage rate (APR) or hourly rate. Please be aware that if your rate is higher than those included in the auction, your assets may not be utilised.
Review the interest rate terms and confirm your lending offer. Your stablecoins will start earning interest once they get locked in an auction, enabling you to earn an hourly yield.
Ready to explore the power of stablecoins for payments, trading, and earning?
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.