President of the Solana Foundation: Anticipate a Decline in Profits for Tether and Circle

Ditch the meme coins. By 2025, the crypto asset landscape is being shaped by stablecoins. Tether’s USDT remains the clear frontrunner, holding over $175 billion as of early October 2025. Circle’s USDC takes the second spot, while algorithmic contenders like Ethena’s USDe and Sky’s USDS are rapidly advancing.

The surge of stablecoins has invigorated the wider market, providing a boost for some of the most sought-after cryptocurrencies. With Tether generating billions, investment has poured into ETH and BTC, driving them to new all-time peaks in 2025. As USDT, USDC, and their counterparts thrive, their issuers are enjoying billions in earnings. Each $1Bn increment in USDT or USDC circulation yields revenue for the issuer from interest on its treasury bill assets, which serve as the backbone for these tokens.

(Source: Coingecko)

To illustrate the impact, Tether reported a net profit of $5.7Bn in the first half of 2025, fueled largely by interest income from its reserves, primarily U.S. Treasuries and similar assets. In contrast, Circle’s net income was around $315.8M during the same timeframe, with its reserves bringing in $1.23Bn.

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Warning from Solana Foundation President: Tether, Circle Profits are Set to Decline

Despite the impressive figures and Tether and Circle’s stronghold in the stablecoin market, Solana Foundation President Lily Liu is sounding the alarm.

In a recent post on X, she cautioned that Tether and Circle are on the brink of a significant change. A considerable portion of their revenue is anticipated to be redistributed, not only to their platforms but also to the core networks and gaining momentum dApps managing substantial values.

(Source: calilyliu, X)

She highlighted that, unlike the current scenario where most stablecoin issuers reap every cent, the situation is rapidly evolving. The expected reshaping of the $305Bn stablecoin market will finally start distributing those profits among users.

Liu elaborated that the “profit pool” generated by the assets backing stablecoins is central to this shift. At present, after a recent interest rate reduction to the 4–4.25% range, issuers typically achieve about a 4% yield on Treasuries. This yield, essentially the net interest margin (NIM), is what enabled Tether to amass billions in net profit. In 2024 alone, Tether secured 100% of the NIM, achieving $13.7Bn.

However, as stablecoins gain wider acceptance and more entities join the sector to issue their own, this power structure is being reversed. Key players on widely-used blockchains, where these stablecoins are created and exchanged, are now competing for a portion of the profits. To ensure rapid acceptance, issuers might need to relinquish significant parts of their margins in return.

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Will Protocol dApps and Tech Companies Drive the Change?

A notable case is USDC. While Circle is the recognizable name behind the stablecoin, it shares its earnings with Coinbase, the trading network with more than 100 million global users.

Consequently, while Circle generates billions from its Treasury holdings, Coinbase receives half of that, benefitting from the transaction volume and protocol effects upon which Circle relies for its expansion.

Circle earned ~$1.7b revenue in 2024 and paid out $900M+ to @coinbase as a distribution partner

That ~$1B going to Coinbase likely comes with little to no cost/opex to serve. At 10x earnings = $10 B mkt cap and likely contributes ~25% of $COIN valuation

For perspective -… pic.twitter.com/2Et3yaSgas

— James Ho (@jamesjho_) April 1, 2025

This collaboration exemplifies how major platforms, managing enormous assets, utilize their leverage to negotiate fiercely for their share.

PayPal’s PYUSD stablecoin, issued by Paxos and currently overseeing over $1.1 billion, employs a similar strategy. By harnessing PayPal and Venmo’s extensive user base, Paxos achieved swift adoption while allowing the payment powerhouse to earn from the crypto token. The greater the issuance of PYUSD, the more income flows to PayPal, boosting its profitability.

1/Breaking News: @PayPal USD (PYUSD) is live on Solana!

PayPal USD stablecoin issued by @Paxos will leverage Solana and coin extensions to serve over 30m+ merchants, empowering users with fast and secure stablecoin transactions. pic.twitter.com/h66iejTv50

— Solana (@solana) May 29, 2024

The momentum is picking up on popular protocols as well. Hyperliquid has recently introduced its own stablecoin, USDH, issued by Native Markets. The agreement mandates a significant portion of the revenue to be shared with platform users and employed to buy back and eliminate HYPE tokens from circulation.

Native Markets securing the USDH ticker sets up two big shifts:

+ A brand-new crypto token airdrop farm
+ A vampire attack on USDC/USDT

Here’s why: NM’s proposal splits yield 50/50.
Half goes to HYPE buybacks
Half fuels ecosystem growth

That “growth” side is essentially a fresh… pic.twitter.com/9BOdZi07FI

— Cypher (@NxtCypher) September 19, 2025

Specifically, +50% of USDH revenue will base level the Hyperliquid Assistance Fund for HYPE buybacks and burns, while the remaining will be reinvested into the USDH ecosystem.

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