The US dollar is collapsing, and fiat-backed stablecoins will follow suit.

Stablecoins are the cornerstone of decentralized finance (DeFi), facilitating over $275 trillion in global value transfers. However, as the US dollar’s reserve currency status weakens, stablecoins are facing severe challenges. Due to policy uncertainty and debt reaching as high as $38 trillion, the dollar has depreciated by 11% this year, and its instability threatens mainstream dollar-pegged tokens such as Tether’s USDT (with a market cap of $183.3 billion) and Circle’s USDC (with a market cap of $75.9 billion). In response to this challenge, some initiatives have emerged, such as the launch of gold-backed stablecoins. Promax United in Abu Dhabi and Burkina Faso plan to launch Africa’s first such stablecoin, which will be backed by up to $8 trillion in gold and mineral reserves, aiming to reduce reliance on the US dollar and promote asset-backed digital currency transactions.