DeFi in Q2: Stablecoins Soar, Mini Apps Rise, and Sophisticated Capital Structures Reemerge

Q2 saw significant activity in stablecoins, with JPMorgan launching its USD Deposit Token and Coinbase debuting its stablecoin payment stack. Despite this, stablecoins remain concentrated with Tether claiming 63% of the circulating supply. Mini apps emerged as a new access layer for DeFi, aiming to simplify on-chain finance and make it accessible to a wider audience. Structured products also returned to DeFi, offering sophisticated capital structures without the baggage of previous cycles.

In the second quarter of 2025, the stablecoin market witnessed significant activity and innovation, with notable developments and trends shaping its landscape. JPMorgan launched its USD Deposit Token, while Coinbase introduced its stablecoin payment stack, both aimed at enhancing the utility and accessibility of stablecoins. Despite these advancements, Tether (USDT) continues to dominate the market, claiming 63% of the circulating supply [1].

Mini apps emerged as a new access layer for decentralized finance (DeFi), simplifying on-chain finance and making it more accessible to a broader audience. These mini apps offer users a streamlined interface to interact with DeFi protocols, reducing the complexity traditionally associated with blockchain technology. Additionally, structured products returned to the DeFi space, providing sophisticated capital structures without the baggage of previous cycles.

The stability of stablecoins remains a critical concern, with fiat-backed stablecoins like Tether (USDT) and USDC (USDC) being considered safer due to their backing by reserves of cash or government bonds [1]. However, algorithmic stablecoins and synthetic stablecoins, which rely on market incentives and derivatives, pose higher risks. The collapse of TerraUSD in 2022 serves as a stark reminder of the potential pitfalls of algorithmic stablecoins.

The second quarter also saw a focus on regulatory compliance and transparency. Issuers of stablecoins are increasingly subject to scrutiny, with regulators examining their reserve management practices and the adequacy of their backing. This heightened regulatory environment underscores the importance of maintaining robust and transparent reserve practices to ensure the stability and reliability of stablecoins.

In summary, Q2 2025 was marked by innovation and consolidation in the stablecoin market. While Tether continues to dominate, the entry of new players and the development of mini apps and structured products indicate a dynamic and evolving landscape. As the market matures, the focus on stability, transparency, and regulatory compliance will be crucial for the continued growth and acceptance of stablecoins.

References:

[1] Bankrate. "Worlds Largest Stablecoins." Retrieved from https://www.bankrate.com/investing/worlds-largest-stablecoins/