Stablecoins win only if they can clear the redemption constrain
Blockchain makes transfers fast, not money. Payments are slow because of balance-sheet plumbing (not old tech):
- intraday credit
- netting
- legal finality
- limits
- compliance
A stablecoin is a private dollar liability, so the peg is a throughput problem:
Let B = same-day liquidity buffer (cash + O/N repo)
L = committed bank lines
C = redemption processing capacity ($/hour)
τ = bank settlement lag
The peg holds in stress only if, over a horizon H, min(B+L, C·H) ≥ expected outflows over H (given τ)
When outflows outrun redemption capacity, the peg stops being arbitrage and becomes order-book depth + funding: spreads widen, liquidity fragments, and “par” turns into a market price
EM demand is functional dollars (real fee = on/off-ramp spread).
G10 demand is 24/7 programmable gross settlement only where netting can’t compress exposures
Speed is messaging. Convertibility capacity is the product. Backstops decide survival. Distribution decides scale
Blockchain makes transfers fast, not money. Payments are slow because of balance-sheet plumbing (not old tech):
- intraday credit
- netting
- legal finality
- limits
- compliance
A stablecoin is a private dollar liability, so the peg is a throughput problem:
Let B = same-day liquidity buffer (cash + O/N repo)
L = committed bank lines
C = redemption processing capacity ($/hour)
τ = bank settlement lag
The peg holds in stress only if, over a horizon H, min(B+L, C·H) ≥ expected outflows over H (given τ)
When outflows outrun redemption capacity, the peg stops being arbitrage and becomes order-book depth + funding: spreads widen, liquidity fragments, and “par” turns into a market price
EM demand is functional dollars (real fee = on/off-ramp spread).
G10 demand is 24/7 programmable gross settlement only where netting can’t compress exposures
Speed is messaging. Convertibility capacity is the product. Backstops decide survival. Distribution decides scale
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