Tether co-founder Reeve Collins has introduced Pi Protocol, aiming to provide a more decentralized and yield-bearing alternative to USDT.
What Is Pi Protocol?
Pi Protocol is a decentralized stablecoin project set to launch on Ethereum and Solana later this year. Unlike Tether, Pi Protocol will allow users to mint their own stablecoins by submitting collateral via smart contracts. The project's key tokens include USP, the main stablecoin, and USI, a yield-bearing token received for minting USP. Collins describes it as the next evolution of stablecoins, arguing that Pi will distribute yield among users, unlike Tether.
How Will Pi Protocol Work?
Pi Protocol will utilize tokenized real-world assets (RWAs) such as U.S. Treasuries to generate yield for stablecoin holders. Its governance will revolve 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 collateral policies, and influence the overall direction of the protocol. Pi Protocol is launching amidst tightening stablecoin regulations, aiming to appeal to investors seeking a compliant alternative to USDT.
Can Pi Protocol Challenge Tether?
Despite potential advantages, Pi Protocol faces challenges. Tether remains the largest stablecoin with a $141 billion market cap and $13 billion net profit in 2024, dominating 63% of the stablecoin market. Tether's liquidity and established network effects make it the most traded crypto asset. Major financial players like BlackRock are betting on programmable dollars as the next financial innovation phase, while the IMF suggests stablecoins may strengthen the U.S. dollar's dominance. Vlad Tenev, CEO of Robinhood, notes that to compete with banks, stablecoins must offer yield, which Pi Protocol aims to provide.
Pi Protocol's USP stablecoin is set to launch on Ethereum and Solana by the second half of 2025. Although brand confusion may occur, Collins’ reputation as a Tether co-founder lends credibility to the project.
