Stablecoins Are Not What They Seem
There's a narrative we've all bought into -- that stablecoins are the safe corner of crypto. A way to opt out of volatility. A digital dollar you can trust.
But look closer, and that safety starts to feel like a story we tell ourselves.
1. Stablecoins = Shadow Banks
Stablecoins claim to be 1:1 backed. You deposit a dollar, you get a tokenized dollar -- simple.
But under the hood? That "backing" is mostly short-term U.S. Treasuries.
Not cash. Not instantly liquid.
Debt instruments with market risk.
And when interest rates rise -- as they have -- bond prices drop. That means unrealized losses for stablecoin issuers. The same dynamic that helped take down Silicon Valley Bank and caused the temporary depeg in USDC in 2023.
In a panic, large redemptions could force issuers to sell bonds into a drawdown -- turning a "fully backed" asset into a very real liquidity crunch.
Sound familiar? That's a bank run.
We're just calling it crypto now.
2. The Dollar You Redeem Into Isn't Standing Still
Even if your stablecoin is fully backed, even if it survives a panic, you're still redeeming into U.S. dollars. And those dollars are losing purchasing power every year.
Inflation, rising costs, real wage stagnation, growing deficits -- the fundamentals of fiat aren't getting stronger.
Holding a stablecoin might protect you from price swings.
But it doesn't protect you from monetary erosion.
3. Stability Has an Opportunity Cost
For most people, the appeal of stablecoins is simple: peace of mind.
No swings. No drama.
But that peace often comes at a cost: no upside.
And historically, every attempt to generate yield on stablecoins -- beyond a few percent -- has veered into unsustainable territory. High yield + hard peg is a formula we've seen collapse more than once.
Stability without a clear yield engine becomes a magnet for dangerous schemes.
4. Better Tools Are Emerging (Even If They're Not Perfect Yet)
New approaches -- like the Jupiter Liquidity Pool (JLP) token -- offer blended exposure to SOL, ETH, BTC, and USDC, aiming to smooth volatility through diversification and fee capture from perp traders.
It's not risk-free, and it's also not pretending to be.
The model acknowledges the chaos -- and tries to structure around it.
5. Alpha Has Always Lived in Volatility
The biggest gains in crypto didn't come from holding stablecoins. They came from leaning into chaos.
Bitcoin: 10¢ to $111,000
Ethereum: 30¢ to $4,800
DOGE: literal joke to multi-billion-dollar market cap
That volatility isn't random. It's where inefficiencies -- and opportunities -- live.
6. What's the Real Risk?
The real risk isn't price swings.
It's mistaking stability for safety.
Because stablecoins carry risks too:
- Bond market exposure
- Counterparty and custody risk
- Redemption freezes
- Regulatory pressure
- Long-term erosion through dollar debasement
And when the system they're tied to -- fiat and Central Banks -- is under strain (rising rates, global fragmentation, geopolitical shocks)... the peg only holds as long as people believe it should.
7. So What Do You Do?
You stay honest about where we are.
This isn't a stable system.
We're not in a stable era.
Tariffs. Debt spirals. Policy volatility. Even the U.S. is building a Strategic Bitcoin Reserve now -- not because Bitcoin is perfect, but because it's a hedge.
Volatility isn't the enemy. It's the truth.
And unstable might be the first meme to admit it.
It doesn't pretend to be safe.
It doesn't hide behind treasuries or pegs.
It just says: this is where we are.
Unstable isn't a bug.
It's what happens when belief catches up with reality.