Author: Jae, PANews
Stablecoins, as the ballast of the crypto market and financial infrastructure, have become a battleground for all players.
In a stablecoin market dominated by two major players, USDT and USDC, a dark horse with unique characteristics has successfully entered the final round. USD1, a US dollar stablecoin issued by World Liberty Financial (WLFI), a DeFi protocol led by the Trump family, has seen its market capitalization climb to $4.6 billion in just over a year since its launch, quickly ranking among the top five stablecoins.
The unique background has allowed USD1 to break out of the traditional framework from the very beginning. A breakthrough battle combining political dividends, capital support, and commercial interests is underway.
Political and business capital are entering the market, leveraging substantial investment to drive a tenfold increase in USD1.
The stablecoin market is never short of players, but USD1 is unique in that it has "insider connections."
According to Bloomberg, the WLFI shares held by US President Trump and his family are valued at approximately $2.6 billion, making it the largest single asset in the family's total wealth.
Capital investment followed, coinciding precisely with a crucial moment in the US power transition. Last January, four days before Trump's inauguration, Aryam Investment, a private investment entity with ties to the Abu Dhabi royal family (Tahnoon), acquired a 49% stake in WLFI for $500 million. This influx of Middle Eastern capital not only provided early liquidity for WLFI's USD1 issuance but also paved the way for its international expansion.
Coincidentally, Pakistan also signed a memorandum of understanding with a WLFI-affiliated entity in January of this year to explore integrating USD1 into its national payment and cross-border settlement infrastructure. This sovereign credit backing will break the stereotype of USD1 as a "shadow banking tool," allowing it to become a digital asset that helps sovereign states optimize foreign exchange clearing and hedge against local currency inflation.
USD1 possesses an inherent political aura, precisely positioning itself during a period of policy dividends for the US crypto industry. The deep intertwining of the political and business landscape endows USD1 with a level of political sensitivity and credibility that is difficult for ordinary crypto protocols to match.
The issuance of USD1 coincided with Congress's full-fledged push for the Genius Act. On July 18 last year, Trump officially signed the Genius Act, which stipulates that compliant payment stablecoins are not considered "securities" or "commodities" under federal securities laws or commodity exchange laws. This effectively exempted the long-standing dual regulatory infighting between the SEC and CFTC, formally transferring regulatory power to federal banking regulators.
This historic rule change allowed USD1 to capture a wave of compliance benefits. As a payment stablecoin under the framework of the legislation, USD1 is issued by a regulated WLFI entity, and its reserves are fully held in highly liquid assets at a 1:1 ratio.
In designing its business model, WLFI demonstrated the pragmatism and competence of government and business capital:
Stable interest income: WLFI has chosen BitGo as its primary custodian. With $4.6 billion in reserves and an annualized US Treasury yield of approximately 3.5%, USD1 is expected to generate approximately $150 million in annualized interest income for WLFI, making it the most powerful "money-printing machine" at the protocol's core.
WLFI's ambition to connect directly to the Federal Reserve: WLFI is applying for a National Trust Bank license from the Office of the Comptroller of the Currency (OCC), attempting to complete the leap from "crypto asset" to "regular financial instrument";
Symbiotic Ecosystem among Giants: In March of last year, Abu Dhabi's sovereign wealth fund MGX settled its investment in Binance, a leading centralized exchange (CEX), with $2 billion in USD1. Since then, USD1 and Binance have maintained a close partnership. According to Forbes, Binance holds approximately 87% of USD1 and provides its holders with exclusive incentives such as fee waivers and airdrops of WLFI governance tokens, effectively accelerating the expansion of USD1's early settlement network. Benefiting from WLFI's substantial subsidies for users trading USD1 and Binance's support for USD1 as margin, USD1's daily trading volume has increased tenfold from $200 million before subsidies to the current $2 billion.
In the past six months, WLFI has spent more than $115 million on interest subsidies, enabling USD1 to achieve a market value increase of more than $1.2 billion, which is equivalent to leveraging ten times.
On-chain data shows that the main increase comes from Solana. The supply of USD1 on Solana was over $160 million at the beginning of the year and is now close to $1 billion, an increase of about $840 million. The rest of the increase is mostly concentrated on Ethereum.
However, behind the glamour, the political and business relationships have also created opportunities for competitors. The U.S. House of Representatives has launched a special investigation into equity transactions and potential transfer of benefits between WLFI and Aryam Investment, requiring the project to retain all communication records and compliance documents. Under the spotlight, every step of USD1's expansion will face increasingly stringent regulatory scrutiny.
Reshaping the dollar onto the blockchain, heading towards borderless payments
Mainstream stablecoins have become the carriers of "on-chain dollar," and USD1 is no exception. Its plan is to smooth out the friction between traditional finance and DeFi, allowing on-chain liquidity to take root in the global real economy and redefine the application boundaries of on-chain dollar.
However, conventional approaches face two major structural challenges:
Limited application scenarios: Even if the US dollar is put on the blockchain, it will be trapped in native crypto scenarios such as trading, lending, and market making for a long time, making it difficult to penetrate the real economy and daily consumption on a large scale.
Geographical limitations: In areas and among populations where terrestrial networks are limited, the on-chaining of US dollars cannot truly reach the "last mile" of the real economy, leaving stablecoins collectively silent.
In short, while the traditional on-chain approach to the US dollar has achieved tokenization, the issues of transaction costs and coverage blind spots remain significant.
WLFI, on the other hand, is trying to break through the limitations and make USD1 a unified settlement layer that directly connects to bank accounts, payment networks, and even global communication infrastructure.
In February of this year, Zak Folkman, co-founder of WLFI, revealed at the Consensus conference in Hong Kong that the project plans to launch World Swap, a foreign exchange and cross-border remittance platform.
This is a coveted and enormous market: the global daily foreign exchange trading volume has exceeded US$9.6 trillion, and the annual size of the personal remittance market is nearly US$892 billion. However, this century-old system has always been "heavily taxed" by traditional remittance networks represented by SWIFT.
World Swap's breakthrough lies in using USD1 as the settlement medium, bypassing complex intermediary networks and directly connecting on-chain stablecoins with global debit cards and bank accounts. This direct processing will reduce the settlement cost of cross-border remittances to "a fraction" of that of traditional remittance institutions, achieving low-friction, instant settlement around the clock.
Beyond foreign exchange, WLFI also launched the DeFi lending protocol World Liberty Markets in January. To date, the platform has raised over $600 million.
With seamless integration of savings, lending, and foreign exchange scenarios, USD1 has built a complete on-chain financial ecosystem, transcending the single payment attribute of traditional stablecoins.
USD1's ambitions don't stop at terrestrial internet. While most protocols are still focusing on online scenarios, WLFI has set its sights on the vast low-Earth orbit. Through a strategic partnership and token swap agreement with satellite communications startup Spacecoin, USD1 will be natively integrated into Spacecoin's DePIN (decentralized physical infrastructure) network.
This cross-industry collaboration addresses a long-standing payment pain point: in remote or disaster-stricken areas lacking ground infrastructure and traditional gateways, users are unable to conduct transactions through traditional financial channels. Spacecoin's low-Earth orbit satellites can independently carry on-chain settlement streams, allowing users to directly complete cross-border payments and micro-settlements using USD1 upon their first connection to the satellite network.
From terrestrial internet cables to low-Earth orbit satellites, USD1 will extend the circulation boundaries of the digital dollar to corners that traditional payment networks cannot reach, truly enabling stablecoins to achieve "no geographical restrictions."
Filling the gap in AI infrastructure and seizing the opportunity of the "silicon-based economy"
Policy positioning and expansion of physical payments are USD1's strategy to seize existing market share in the real financial ecosystem, while its efforts in AI payment infrastructure represent an "incremental bet" on the future digital economy.
As agents play an increasingly independent role in workflows, a pressing impasse has emerged: agents lack payment systems adapted to their characteristics.
Traditional financial accounts require in-person KYC (Know Your Customer) verification and cannot support high-frequency, low-value agent-to-agent (A2A) settlements. While conventional crypto wallets have no account opening requirements, they lack sophisticated on-chain budget control systems and struggle to connect with offline physical consumption. On one hand, agents are evolving rapidly, and on the other hand, payment infrastructure lags behind, exacerbating the supply-demand imbalance.
Against this backdrop, WLFI released the open-source toolkit AgentPay SDK, aiming to fill this gap. AgentPay SDK's modular technical architecture clearly distinguishes between the AI's "hands and feet" and the user's "wallet." It sets USD1 as the default settlement token, allowing the Agent to independently execute, manage, and settle accounts in a decentralized and user-self-custodied manner.
To adapt to the characteristics of Agent transactions, the AgentPay SDK introduces a "Recoverable Workflows" mechanism. When an Agent fails to perform tasks such as purchasing computing power or subscribing to APIs due to insufficient wallet balance or lack of Gas, the SDK does not simply return a cold, impersonal crash code. Instead, it outputs a message to the Agent, including the Gas token type, corresponding chain ID, and a recharge QR code, ultimately providing feedback to the user in a user-friendly manner. Once the recharge is complete, the system will automatically retry, significantly improving the continuity of the automated workflow.
Beyond online payments, WLFI has also expanded into offline consumption scenarios. Through native integration with Bitrefill, a global giant in gift cards and telecommunications services, agents equipped with the AgentPay SDK can use USD1 to independently purchase virtual credit cards, global eSIM cards, and various lifestyle service gift cards. This means that agents running in the cloud can not only pay computing power bills and subscribe to online APIs, but also independently book airline tickets, handle communication services, and purchase physical goods.
From on-chain settlement between agents to real-world consumption covering clothing, food, housing, and transportation, USD1 will rely on the AgentPay SDK to lay out a two-way "on-chain-entity" transaction channel, shaping a prototype for the commercialization of the still nascent smart agent economy.
As a stablecoin project directly endorsed by the Trump family, USD1 has reshaped the competitive landscape of the stablecoin market in just over a year thanks to its clever political positioning and the heavy adoption by sovereign capital.
The next test for USD1 will be whether it can break free from the greenhouse of "policy dividends" and shift to endogenous growth driven by cross-border exchange settlement and agent payments.
In the fertile ground of the stablecoin sector, the rise of USD1 is a unique gamble. The halo effect of its background has accelerated its growth, but the real test lies in whether it can turn the blueprint of "borderless payments" and "silicon-based economy" into reality.
