Tether Co-Founder Launches Yield-Bearing Stablecoin in $225B Market

Reeve Collins, a co-founder of Tether (USDT) and its first CEO, is making waves in the stablecoin market once again. This time, he's introducing Pi Protocol, a decentralized, yield-generating stablecoin set to launch on Ethereum and Solana in late 2025. Pi Protocol aims to challenge dominant players like Tether and Circle's USDC by leveraging tokenized real-world assets such as U.S. Treasuries—a model gaining traction with competitors like Ethena, Mountain Protocol, and BlackRock’s BUIDL.

Pi Protocol's stablecoin is expected to generate yield, likely through tokenized real-world assets such as U.S. Treasuries. This model follows the path of emerging competitors like Ethena’s sUSDe ($4.5B supply) and Mountain Protocol’s USDM (5% yield), alongside BlackRock’s BUIDL fund. With traditional stablecoins evolving into interest-earning digital dollars, major players are entering the sector. Tether itself remains dominant, reporting $13 billion in net profits in 2024 from government bonds, repurchase agreements, and money market funds. Its market cap stands at $141 billion, reinforcing its role as the most traded digital asset in crypto markets.

Meanwhile, institutional investors like BlackRock are betting on programmable dollars as the next phase of financial innovation, while IMF experts suggest stablecoins may strengthen the U.S. dollar’s dominance rather than challenge it. Tether, on the other hand, is expanding into AI while Collins moves back into stablecoins. Tether Data, the company's AI division, is developing applications like AI Translate, AI Voice Assistant, and an AI Bitcoin Wallet Assistant to enhance user engagement and functionality. Tether's interest in AI was first signaled in 2023 with an investment in Northern Data Group, a leader in cloud computing and artificial intelligence.

Pi Protocol's stablecoin is expected to generate yield through tokenized real-world assets, offering investors the opportunity to earn passive income while holding the stablecoin. This model differs from traditional stablecoins like Tether and USDC, which are designed to maintain a steady value without offering any yield. Pi Protocol's decentralized nature and yield-generating mechanism could attract a whole new wave of investors looking for both stability and passive income in crypto. As the stablecoin market continues to evolve, Pi Protocol's innovative approach may challenge the dominance of established players like Tether and USDC.