The Stablecoin Zoo: Or How I Learned to Stop Worrying and Love the Fragmentation

TLDR: How 79 Dollars Killed Fungibility

Nov 13, 2025

**A Monetary Circus Where Every Dollar Costs $1.02**

TLDR: How 79 Dollars Killed Fungibility

The Punchline: You just paid $95 to swap $50,000 for $50,000. That’s not a transaction fee — it’s a colonial tax. 79 entities claim to sell “one dollar,” but swapping between them costs 7–19 basis points per million. We didn’t digitize money. We digitized the 1863 American banking chaos and 265 AD Roman fragmentation. History doesn’t repeat, but it rhymes at exactly $19,000 per swap.

The Four Futures:

(15–20%) Rome Burns → Tether’s “attestations” become confessions. DeFi freezes. We return to bartering ETH for BTC like it’s 2013, except now we call it “digital primitives.”

(40–45%) Congress Acts → The GENIUS Act forces 100% reserves. Tether flees to Vanuatu. Circle becomes Chase Jr. The zoo becomes a petting zoo with three approved animals.

(25–30%) Code Wins → Neutral settlement layers (XRPL, 3-second finality, sub-penny fees) make stablecoin brands irrelevant. The religious wars end when someone invents tolerance.

(10–15%) Banks Colonize → JPM-USD launches. Your cute DeFi circus becomes a traveling sideshow next to Madison Square Garden. Boring wins. It always does.

The Gambit: While 79 stablecoins fight over territory, XRPL owns the roads. RLUSD isn’t another zoo animal — it’s the 10-year veteran who trained with regulatory ankle weights while everyone else partied. The SEC throttled it. The lawsuit settled. Now 20% of RLUSD already lives on XRPL vs Ethereum. Mastercard pilots it. Japan uses it.

The Question: Each stablecoin is a digital colony extracting seigniorage, controlling monetary policy, imposing transaction taxes, and exercising sovereignty through freeze functions. But they all colonize for the same empire: the US Dollar. The ultimate irony? In trying to make the dollar dominant, we revealed its greatest weakness — the dollar itself is a fragmented fiction.

When the basis points price consolidation at 7–19 per million, which path survives: crisis, Congress, code, or tradition?

Reading time: 15 minutes of monetary horror stories
Discomfort level: Realizing your “stablecoin” isn’t stable, fungible, or technically a coin
Number of times you’ll check swap spreads while reading: At least twice — and regret it both times
Historical empires referenced: 2 (both collapsed)
Your portfolio’s exposure to this zoo: More than you think

Welcome to the Dollar Store (Where Everything Costs $1.02)

The Starting Point

Last week, someone, somewhere tried to swap $50,000 of USDT for USDC. Cost him $95 in fees and slippage.

Staring at his screen for a full minute, contemplating the absurdity. He just paid nearly $100 to exchange fifty thousand American dollars… for fifty thousand American dollars.

That’s the signal & proof: We’re living in monetary purgatory.

The Zoo Census

Picture this: 79 different entities and counting all claiming to sell you the same product — one US dollar. But when you try to exchange Vendor A’s dollar for Vendor B’s dollar, suddenly there’s a “convenience fee.”

It’s like walking into a mall where every store has its own currency called “Mall Dollars,” but Nike Mall Dollars aren’t accepted at Adidas, and exchanging them costs 2%.

The Current Inmates:

Tether ($183B): The mob boss who runs quarterly “trust me” audit
USDC ($75B): The teacher’s pet who still failed when SVB collapsed
PYUSD ($2.8B): PayPal’s attempt, which accidentally minted 2.5x global GDP
USDe ($8.5B): The math experiment that thinks derivatives equal dollars
RLUSD ($1B+): The new kid claiming to be “infrastructure, not competition”

The $19,000 Question

Here’s the math that broke my brain:

Swap $1 million USDT → USDC on Binance: 10 basis points ($1,000)

Swap $1 million USDT → USDC on Curve: 7–19 basis points ($7,000-$19,000)

That’s not a transaction fee. That’s a colonial tax on navigating between competing monetary empires, all claiming to rule the same territory.

There are for sure drug dealers with better exchange rates.

Meet Your Colonial Governors

Tether: The Godfather

“We have $127 billion in Treasuries,” they say. “Plus robust Bitcoin and gold reserves.”

Robust. That’s the word you use when you don’t want to say “we’re gambling with your backing.”

Tether is that friend who always has money but never a receipt. They provide “attestations” — which is like Trump attesting that he is definitely 6’3”.

The Tether Special: Only 6 arbitrageurs can redeem during a crisis. When panic hits, it’s like having six exit doors at a 50,000-person stadium. The price crashes to $0.95, but ironically, this SAVES them — people won’t sell at a 5% loss.

Fragility through incompetence. Nassim Taleb would be proud.

Circle: The Hall Monitor

Circle went full corporate. SEC-registered funds. BlackRock management. Monthly Big Four audits. They’re the straight-A student who does everything right.

Then Silicon Valley Bank collapsed.

USDC depegged faster than my faith in traditional finance. Turns out being the “good” stablecoin just means you fail in more predictable ways.

The Circle Paradox: 521 arbitrageurs defend the peg during crisis. Sounds good? Wrong. The peg holds at $0.99, so everyone thinks “I better get out while I can at a good price.” The stampede accelerates.

Their defense mechanism is their death warrant.

PayPal: The Decimal Point Disaster

October 2025. Some genius at Paxos fat-fingers an internal transfer.

Suddenly: $300 TRILLION PYUSD exists.

That’s 2.5x global GDP. For about 17 minutes, PayPal technically owned Earth, Mars, and whatever Elon’s building on both.

This is your “regulated, safe” stablecoin. One typo away from intergalactic monetary policy.

Ethena: The Quant’s Fever Dream

“We don’t need dollars. We have math.”

Ethena backs USDe with staked ETH while shorting ETH perpetuals. It’s like saying “I’m not drunk, I’m just inversely sober with a derivatives hedge.”

This is the monetary equivalent of that guy who insists he’s invented perpetual motion. Sure, it works… until funding rates spike, liquidations cascade, or someone divides by zero.

RLUSD: The Regulated Rebel

“We have 10+ years of runtime. Battle-tested infrastructure. And a regulatory ankle monitor.”

Robust: That’s the word you use when the tech works perfectly but the government doesn’t want you to succeed. Ripple isn’t a startup. It’s a veteran that’s been fighting with one arm tied behind its back since 2020.

The SEC spent four years trying to prove XRP was a security. They failed. But the damage was done — years of “regulatory uncertainty” that kept XRPL for institutions at bay while ETH got its ETF and SOL got its hype cycle.

Fragility through bureaucratic incompetence — or “fragilization by regulator.”

History Lessons from Dead Empires

America’s Monetary Chaos (1837–1863)

After killing the central bank in 1836, America went full libertarian. 8,000+ banks printed their own money.

“Wildcat banks” set up redemption offices in swamps where “wildcats roamed.” The 1850s version of “boating accident lost my keys.”

Bank Note Reporters emerged — weekly magazines listing which bank’s dollar was worth $0.97 vs $0.83 in your town. The original CoinGecko.

Sound familiar? We’re just doing it digitally now.

The solution? The National Banking Act imposed a 10% tax on private banknotes. Killed the zoo overnight.

The GENIUS Act is coming. History doesn’t repeat, but it sure loves a good echo.

Rome’s Monetary Meltdown (235–284 AD)

This is my favorite bedtime story.

50 small kingdoms from an empire in 50 years. Each minting their own coins. Alexandria’s denarius ≠ Gaul’s denarius ≠ Britain’s denarius.

Just like USDC-on-Ethereum ≠ USDC-on-Solana ≠ USDC-on-Arbitrum.

The Death Spiral:

Syrian merchants couldn’t price Spanish goods
Trade collapsed without fungible money
Regions went full autarky
Eventually: back to bartering goats

Within 30 years, the Roman economy regressed 500 years. From globe-spanning empire to “I’ll trade you three chickens for that sword.”

That’s your stablecoin future without consolidation.

The Geopolitics No One’s Discussing

The Real Game

While you’re debating USDT vs USDC, nation-states are playing 4D chess.

USA: “Let them fight” (but preparing the GENIUS Act killswitch)

China: “Cute zoo. Here’s our CBDC. Resistance is futile.”

Europe: “Let’s regulate 10 different versions!” (Because Europe)

Each stablecoin is a digital colony. They extract seigniorage, control monetary policy, impose transaction taxes, and exercise sovereignty through freeze functions.

But unlike British India or French Algeria, these colonies exist in the same space. Imagine if colonial powers claimed the same physical territory. That’s your $255 billion stablecoin market.

The joke? They’re all colonies of the same empire — the US Dollar.

Four Ways This Zoo Is Going Extinct

Path 1: The Tether Confession (15–20%)

One morning, Tether’s “robust reserves” turn out to be:

40% actual Treasuries
30% “trust me bro”
20% Bitcoin bought at $65k
10% loans to friends

DeFi freezes. CEXs halt withdrawals. The entire crypto economy discovers what “counterparty risk” means in 4K resolution.

We return to swapping ETH for BTC like it’s 2013. Except now we call it “digital barter” and pretend it’s innovative.

Path 2: The Regulatory Sledgehammer (40–45%)

Congress passes the GENIUS Act. Every stablecoin must:

Hold 100% cash/T-bills
Submit to Fed supervision
Pay into FDIC insurance
Provide real-time attestation

Tether moves to Vanuatu. Circle becomes Chase Jr. The zoo becomes a petting zoo with three approved animals.

Boring? Yes. Likely? Extremely.

When has Congress ever met a financial innovation it didn’t want to strangle?

Path 3: The Neutral Switzerland (25–30%)

This is where XRP and XRPL enters, stage left.

Instead of creating Stablecoin #80, the XRP Ledger says: “What if we just made swapping free?”

3-second finality
Sub-penny fees
Atomic swaps
Auto-bridging when needed

Suddenly, who cares if it’s USDT or USDC? It’s like arguing about email providers when SMTP exists.

The Genius Move: XRP doesn’t compete with stablecoins. It makes their competition irrelevant. While they fight over territory, XRP owns the roads.

RLUSD gets this. 20% already on XRPL vs Ethereum. Mastercard’s piloting it. Japan’s using it.

The wars of religion end when someone invents religious tolerance for crypto.

Path 4: The Banking Coup (10–15%)

Jamie Dimon wakes up and chooses violence.

JPMorgan launches JPM-USD. Citi launches CITI-USD. Bank of America… you get it.

Suddenly, your cute DeFi zoo looks like a traveling circus next to Madison Square Garden.

These aren’t stablecoins. They’re tokenized deposits. FDIC insured. Fed supervised. Boring as watching paint dry.

And they’ll win. Because when has boring not won in finance?

The Janus Prophecy

What I See From My Perch

I watch both ways — toward the past and the future. The past shows empires fragmenting their currencies before collapse. The future shows consolidation through crisis or code.

The 7–19 basis points you pay today? That’s just the opening bid. The market is voting every millisecond on which stablecoin dies first, which model breaks next, which colony revolts tomorrow.

The Ultimate Irony: In trying to make the dollar digital and dominant, we’ve revealed its greatest weakness — the dollar itself is a fragmented fiction. There’s the Fed’s dollar, the Eurodollar, the petrodollar, and now 79 digital dollars.

We didn’t digitize money. We digitized monetary chaos.

The Trade

So, what’s the play?

If you believe in:

Chaos → Short everything except Bitcoin
Control → Long regulated stables (USDC, PYUSD)
Innovation → Long neutral infrastructure (XRP, ATOM)
Tradition → Wait for JPM-USD

Me? I’m long XRP and XRPL. Not because I love Ripple. But because in a world of 79 armies fighting over the same hill, I’d rather own the arms dealer. An asymmetric bet — I admit.

The Stablecoin Zoo isn’t the future of money. It’s the messy divorce between the old system and whatever comes next.

The clock is ticking. Each basis point is a vote. Each swap is a referendum.

The question isn’t IF consolidation comes, but HOW:

Through crisis (sudden, painful, wealth-destroying)
Through Congress (slow, captured, soul-crushing)
Through code (elegant, neutral, unstoppable)

I know which future I’m betting on. The market knows too.

It’s pricing it at exactly 7–19 basis points per million.

Author’s Note

Every number in this piece is sourced. Every mechanism is active. The only speculation is whether anyone will build the exit before the building collapses. No financial advice.

I watch with both faces. And both are nervous.

— @XRPWatcherJanus https://x.com/XRPWatcherJanus