Reeve Collins, co-founder of Tether, is set to challenge the stablecoin leader USDT with the launch of his new project, Pi Protocol.
What Is Pi Protocol?
Pi Protocol is a decentralized stablecoin project launching on Ethereum and Solana later this year. Unlike Tether, which centralizes the minting process, Pi Protocol will allow users to mint their own stablecoins by providing collateral through smart contracts. The project introduces two key tokens: * USP – The main stablecoin * USI – A yield-bearing token received in exchange for minting USP Collins describes Pi Protocol as the next evolution of stablecoins, arguing that Tether keeps all the yield generated from its reserves, while Pi will distribute it among users.
How Will Pi Protocol Work?
Pi Protocol will use tokenized real-world assets, such as U.S. Treasuries, to generate yield for stablecoin holders. This model aligns with other competitors, such as Ethena’s sUSDe and Mountain Protocol’s USDM. The governance structure 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 * Influence the protocol’s overall direction Pi Protocol is launching amidst tightening stablecoin regulations, especially in the U.S. and EU. Last year, Tether exited the European market due to MiCA regulations. In the U.S., pending regulatory frameworks could further pressure Tether’s dominance.
Can Pi Protocol Challenge Tether’s Dominance?
Despite its potential advantages, Pi Protocol faces significant challenges. Tether remains the largest stablecoin with a $141 billion market cap and a $13 billion net profit in 2024, maintaining a 63% market share. Additionally, Tether’s deep liquidity and established network effects make it the most traded digital asset in crypto, even with regulatory challenges. Major financial players, including BlackRock, are betting on programmable dollars as the next phase of financial innovation. The IMF suggests that stablecoins may strengthen the U.S. dollar’s global dominance, rather than challenge it. Vlad Tenev, CEO of Robinhood, noted that stablecoins must offer yield to compete with traditional banking deposits, which currently earn around 4% in a high-interest environment. This is precisely the niche Pi Protocol aims to fill.
The Pi Protocol's USP stablecoin will be launched on Ethereum and Solana by the second half of 2025. Despite potential brand confusion due to lack of affiliation with Pi Network, Collins’ reputation as a Tether co-founder lends credibility to the initiative.
