Reeve Collins, a co-founder of Tether, is creating a new stablecoin project called Pi Protocol. He hopes to democratize stablecoin minting and yield returns to incentivize new adoption.
Impending US stablecoin regulations may give Pi Protocol a crucial chance to succeed. Its smart contracts will put a high valuation on Treasury bonds, helping it build up reserves to comply where Tether’s USDT has failed.
Can Pi Protocol Compete Against Tether?
Reeve Collins has seen the stablecoin market change dramatically since co-founding Tether in 2013. He was the firm’s first CEO, selling it to the owners of Bitfinex in 2015. Currently, he remains an active and influential voice in the space.
Today, Collins announced that he’s backing a new stablecoin project to compete with Tether, dubbing it Pi Protocol.
“We view Pi Protocol as the evolution of stablecoins. Tether has been extremely successful in showcasing demand for stablecoins. But they keep all the yield. We believe 10 years later the market is really ready to evolve,” Collins said in an interview.
Pi Protocol will differentiate itself from Tether in a few key ways. Essentially, it will democratize the process of minting stablecoins through smart contracts. Tether currently has a monopoly on minting new USDT assets; Pi Protocol will allow users to submit their own collateral and receive yields themselves.
In this way, users are incentivized to power the system and keep it healthy.
Collins identified a few reasons that make this an ideal moment for Pi Protocol to overtake Tether. Essentially, it all comes down to stablecoin regulations. There’s growing pressure to make a new regulatory framework for these assets in the US, which could change everything for Tether.
Late last year, Tether had to exit the EU over MiCA, and US regulations may cause it further pain.
Regulations Remain a Critical Challenge for Tether
For years, Tether has repeatedly refused independent audits of its reserves, and Bitcoin makes up a huge chunk of them. Proposed regulations will demand that stablecoins have transparent reserves and hold a significant chunk of them in Treasury bonds.
So, Pi Protocol will hope to overtake Tether in compliance, demanding an over-collateralization ratio that highly values these bonds.
Also, the Pi Protocol will accept other forms of collateral than Treasury bonds. The company’s smart contract algorithms will carefully evaluate all submitted forms of collateral, and it will particularly incentivize using Treasuries to mint new tokens.
Several stablecoins tried to out-compete Tether in the EU with Mica, and Pi Protocol will try the same in the US.
“The so-called decentralized project is expected to debut on both the Ethereum and Solana blockchains in the second half of this year or sooner. No financial terms were disclosed,” Marty Folb wrote on X (formerly Twitter).
Another point of brand recognition may help Pi Protocol in this race. This project is completely unaffiliated with the Pi Network, which is currently one of the most popular projects in the crypto space.
Overall, Pi Protocol has many advantages that may help it eclipse Tether, but USDT has a firm grip on the global crypto market. The overall stablecoin market cap reached record highs this month, and USDT dominance remains strong at 63%.
To accomplish this goal, it will take a combination of luck, regulatory opportunities, and investor buy-in. For now, however, Collins seems determined to see it through.
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