Stablecoins were meant to be the steady foundation of crypto. A bridge between volatile assets and real-world money. Digital dollars you could trust.

But if we’ve learned anything, is that behind the promise of predictability, many stablecoins operate in ways that are opaque, extractive, and fragile. Users provide the capital, Issuer hoards the profits. And when cracks appear, it's the users who absorb the risk.

In this article we will explore the biggest challenges of the current stablecoin market and how to best navigate them.

The Rise of Stablecoins

The idea behind stablecoins made sense. Crypto needed something predictable. A way to hold value without exiting the system. So stablecoins stepped in… pegged to fiat, usable across wallets, protocols, and payment rails.

They quickly became the backbone of DeFi, cross-border payments, and crypto treasury management. For institutions, they offered a gateway into blockchain infrastructure without the rollercoaster.

But as adoption grew, so did the blind spots. Few users asked what was backing these tokens. Even fewer asked what was happening with the money they exchanged for the tokens.

While being at the forefront of tech and the money revolution, most stablecoins don’t just mirror traditional finance. They cut corners it wouldn't allow. It was not until recently —after some major scandals and crashes— that the market started reacting.

We have to address these issues before they blow up, again.

Built for Themselves, Not the Market

We believe that the main issue is that stablecoins are a for profit machine built for themselves, not the user. Much like traditional finance, they take advantage of the users risk, and what makes this worse is how hidden the structure often is.

The model starts to break when we, as users, realize they’re not just participants, but the product.

Transparency gaps have made things worse. Issuers promising full backing, but delivering vague or delayed disclosures. Sudden redemption freezes. Missing funds. These aren’t just technical bugs. They’re signs of structural misalignment.

Backed 1:1… but how?

Many stablecoins give users no visibility into what’s backing the token. No clear reporting. No real-time data. Just vague claims and unaudited PDFs.

Some have offered flashy returns without stable reserves. But when pressure hit, the system collapses. These happening have hurt millions of users and eroded probably billions in market trust.

Even among fiat-backed stablecoins, risk hides in the reserves. Not all are backed 1:1 with cash or T-bills. Some hold commercial paper. Others hold crypto. Some even use those funds to leverage into higher-risk strategies quietly increasing systemic fragility while branding themselves as stable.

The lesson? Don’t just ask if a stablecoin is backed. Ask how.

Regulation Steps In

The good news: things are beginning to shift. In Europe, the MiCA regulation is pushing for stronger oversight. Full reserve requirements. Clarity around reporting. Real consumer protection. It’s not perfect, but it’s progress.

Institutional players are also raising the bar. They’re demanding transparency, compliance, and operational clarity before engaging. And as a result, more serious, regulation-first projects are starting to emerge.

A Smarter Way to Design Stablecoins

The real fix isn’t complicated. It starts with a few core principles:

• Transparency by default: Users shouldn’t have to guess what backs their tokens.
• Yield goes to those providing the capital. If your funds are being used to generate value, that value should flow back to you. It’s your money, it should be your yield. Of course businesses need a profit to survive… but hoarding everything is definitely not the answer.
• No lockups, staking tricks, or hidden mechanics. Simplicity is security.
• Alignment with regulation from day one. Stability means nothing if legal risk pulls the rug later.

That’s the path Steady is built on. Not as a pitch, but as a correction to how things have been done. We knew things could be better, we knew things HAD to be better.

We generate yield through short-term US Treasury bills—arguably the most stable asset class available. We share up to 95% of that yield directly with users. It arrives automatically, block by block. No staking. No extra steps. Just passive income for holding the token.

This isn’t innovation for the sake of it. It’s about doing the obvious thing no one else wanted to do: building a stablecoin that works for the user, not just the issuer.

What Comes Next

Stablecoins aren’t going anywhere. They’re too useful, too integrated, and too aligned with how financial systems are evolving.

But if we want them to be trusted long term, they can’t just be digital dollars. They have to be accountable systems. That means transparent reserves. Fair economics. Real-world alignment. And no more pretending users should settle for less.

The market is moving. Slowly, but surely. What matters now is how we build from here.