Stabledash Live · · 25 min
Circle's Chief Economist on Stablecoin Decoupling, USDC Velocity, and the Arc Blockchain
With 
Gordon Liao
Key takeaways
Gordon Liao says USDC supply grew 72% year over year to $75.3 billion, with onchain volume up 247% to $11.9 trillion.
He says stablecoin demand has decoupled from crypto prices, with institutional payments, machine-to-machine payments and enterprise treasury services driving growth.
Circle built Arc as a quantum-ready Layer 1 with USDC as native gas, as some jurisdictions such as Europe require quantum readiness by 2030.
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Summary
Circle's chief economist argues that stablecoin demand now follows payments and machine-to-machine activity rather than crypto prices, and that Arc is built for that shift.
Gordon Liao, Chief Economist and Head of Research at Circle, says USDC supply grew 72% year over year to $75.3 billion, while onchain volume rose 247% to $11.9 trillion. He puts the token's velocity at roughly 90x, with an average transfer size near $557.
Demand decoupled from prices
Gordon Liao says that over the last couple of years the demand for stablecoins has decoupled from the prices of the major crypto blue chips. In his view the focus is shifting to institutional payments, machine-to-machine payments and enterprise treasury services, and that growth is "taking over" from market activity.
He points to September 2019, when the repo rate went from about 3% to 10% intraday because of a shortage of liquidity in the banking system. He argues stablecoins can meet dual policy goals: adding liquidity and easing balance sheet constraints, while acting as a marginal buyer of Treasuries.
“I think stablecoin is actually one of the solutions in which you could achieve dual policy goals. So wind of increasing liquidity in the system and resolving some of balance sheet constraints, but two, also kind of playing that marginal buyer of treasury”
Gordon LiaoWhere the reserves sit
According to Liao, Treasury bills and reverse repos held in a money market fund managed by BlackRock make up something like 80% plus of the USDC reserve. The remainder is spread across liquidity hubs in major financial centers, held on the books of some of the largest banks.
Arc and the agent stack
Circle built Arc as a quantum-ready Layer 1 with quantum-resistant signatures from day one. Liao says using USDC as gas removes the need to hold another token, and that deterministic finality matters for traditional financial institutions. He cites estimates that a cryptographically relevant quantum computer is five to fifteen years away, and notes Europe already requires quantum readiness by 2030.
The company also built an agent stack covering wallets, command line tools, a marketplace and nano payment protocols. Liao believes north of 99% of payments on one agent payment protocol have been in USDC, and says Arc offers the scalability and stability agentic commerce needs.
Payments network
The Circle Payments Network, launched around a year ago, uses Circle's on-ramp, off-ramp and liquidity network to deliver the last mile of payments for enterprises. It now has over 100 institutions, fintechs and PSPs integrated.
Liao's case is that stablecoins are turning into payments infrastructure that no longer follows the crypto cycle. Cross-border payments, which he calls the killer use case for blockchain, are the market he expects Circle's network and chain to serve.
Circle, Coinbase, BlackRock, and Federal Reserve Board of Governors come up most.
- People
- Gordon Liao
- David Duong
- Drew Rogers
- Zach Fowler
- Companies
- Circle
- Coinbase
- BlackRock
- Federal Reserve Board of Governors
- Meta
- Bank for International Settlements
- Cornell Fintech Initiative
- Dfns
- Harvard University
- National Association for Business Economics
