Reeve Collins, co-founder of Tether, is launching Pi Protocol, aimed as a decentralized and yield-bearing alternative to USDT.
What Is Pi Protocol?
Pi Protocol is a self-proclaimed decentralized stablecoin project set to launch on Ethereum and Solana later this year. Unlike Tether, Pi Protocol will enable users to mint their own stablecoins by providing collateral via smart contracts. Key tokens include USP, the main stablecoin, and USI, a yield-bearing token received for minting USP. Collins describes this as the next evolution of stablecoins, asserting that Pi will distribute income among users, unlike Tether.
How Will Pi Protocol Work?
Pi Protocol will leverage tokenized real-world assets, such as U.S. Treasuries, to generate yield for stablecoin holders. The governance structure will center around USPi, a governance and yield-bearing NFT. USPi holders will earn a share of the platform’s revenue, vote on key risk parameters, and influence overall protocol direction. The project launches amid tightening stablecoin regulations in the U.S. and EU, potentially benefiting from its compliance-driven approach.
Can Pi Protocol Challenge Tether’s Dominance?
Despite its potential benefits, Pi Protocol faces steep competition. Tether remains the largest stablecoin with a $141 billion market cap and 63% market share. Even with regulatory challenges, Tether remains the backbone of global crypto trading due to its deep liquidity and established network effects. Major financial players, such as BlackRock, are investing in programmable dollars, while the IMF suggests that stablecoins could enhance the U.S. dollar’s global dominance. Robinhood CEO Vlad Tenev has noted that stablecoins need to offer yield to compete with bank deposits, which Pi Protocol aims to address.
Pi Protocol is set to be a new player in the stablecoin market, aiming to offer more yield and decentralization to users. The project's success will depend on its launch and ability to compete with incumbents like Tether.
