Traditional banks face profit pressure from stablecoin adoption while Layer-2 protocols capture billions in TVL through DeFi deployments.
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Stablecoins are increasingly threatening traditional banking profits as digital dollar usage expands across payments and crypto markets, according to new analysis from Jefferies. The report warns that growing stablecoin adoption could slowly drain bank deposits, forcing lenders to seek more expensive funding sources. Meanwhile, institutional infrastructure is expanding as BitGo partners with StableX to custody assets for a planned $100 million stablecoin-focused treasury.
Mantle Network achieved a major milestone by crossing $1 billion in total value locked (TVL), driven primarily by Aave's successful deployment on the Layer-2 protocol. The lending platform has attracted nearly $800 million in deposits within just one month of launching on Mantle, demonstrating strong user demand for yield-generating opportunities on alternative blockchain networks.
The stablecoin market's regulatory landscape remains complex, with ongoing discussions about reserve requirements and oversight frameworks. While major stablecoins like USDC and USDT have gained regulatory clarity in some jurisdictions, the sector still faces scrutiny over systemic risk and potential displacement of traditional banking deposits. The Jefferies analysis suggests regulators may need to address competitive dynamics between stablecoins and bank deposits.
Stablecoin market capitalization has stabilized around $170 billion globally, representing a significant portion of the broader crypto market's liquidity infrastructure. Layer-2 networks like Mantle are capturing increasing DeFi activity, with combined L2 TVL approaching $15 billion as users seek lower transaction costs and higher yields than traditional financial products offer.
The institutional custody partnership between BitGo and StableX signals growing professional interest in stablecoin infrastructure, while Aave's rapid growth on Mantle demonstrates how established DeFi protocols can quickly gain traction on new networks through user incentives and competitive rates.