Original title: Resolv 2025 and Beyond
Original author: @I v4 n_Ko, founder of @ResolvLabs
Original translation: zhouzhou, BlockBeats
Editors note: This article explores key issues in the development of stablecoins, such as revenue sources, risk isolation, and distribution strategies. The author points out that there is a ceiling for strategies that rely solely on limited market capacity and centralized exchanges, so more diversified revenue channels (such as LSTs, LRTs, etc.) and decentralized risk management mechanisms are needed. By introducing a Tranching-like approach, risks are layered to make stablecoins more robust. At the same time, the article emphasizes the importance of network effects and distribution channels, and believes that the future competition for stablecoins will be based on compliance and global expansion capabilities.
The following is the original content (for easier reading and understanding, the original content has been reorganized):
We are used to the stablecoin market leaders being “transactional”. Indeed, USDT and USDC excel in payments and entry and exit. However, we have only scratched the surface of a potentially larger use case. This underappreciated narrative is “investment” stablecoins, driven by a broader range of crypto-native returns. They replace traditional vaults and become the perfect channel for stable crypto returns.
By taking a flexible, hybrid approach to capturing these returns, Resolv aims to build a true powerhouse of returns. Our goal is to provide a full range of investment solutions infrastructure that grows with the industry. This is our area of expertise and our passion.
The market for yield-generating stablecoins will become massive, as cryptocurrencies can be an excellent source of alpha and the asset base is global. However, there are still two major obstacles that prevent this potential from growing: scalability and risk. Scalability is limited because the on-chain market is relatively small — yields compress quickly.
Cryptocurrency risk remains a “nightmare” for people in traditional finance: for many, even a 5x higher return is not enough to “touch crypto.” We need to build a yield-generating solution that scales with the market while keeping crypto-related risks manageable.
Revenue Expansion
So how do we improve the scalability of the yield streams that support stablecoin returns?
Although a bit oversimplified, the answer is:
Choose the most scalable source
Increase the number of revenue sources
Delta neutral strategies as support are a good source of income, and they rely mainly on perpetual futures, which are huge. Their trading volume is 5 to 10 times that of the spot market. Open interest is also considerable: about $60 billion for Bitcoin, about $10 billion for Ethereum (although it has dropped nearly 3 times recently), and about $5 billion for Solana.
However, there is still a bottleneck here. If you look at these three assets, the actual capacity of the market (before significant impacts are felt) is about $20 billion. This is good, but not enough if we want to build for scale and future proofing.
More importantly, counterparty exposure limits on centralized exchanges (where futures trading takes place) and liquidity on decentralized exchanges limit the opportunities for any single strategy operator. Not to mention, if a single entity holds the majority of positions, this would pose a huge systemic risk.
In layman’s terms, this means we need to diversify. And not just within a single delta-neutral strategy, but across underlying assets and exchanges.
These sources can be different: from LSTs (staking tokens) and LRTs (liquidity providing tokens) to lending markets. These sources can be created by external providers and projects, operated by third parties, and supervised by dedicated risk managers. We can also solve the liquidity fragmentation problem - because these sources all support a single stablecoin, thus driving the liquidity flywheel.
To make this work, we need a modular approach and a chain-centric architecture. You might ask, “Well, do you just combine a bunch of cryptocurrency returns and see how it works?”
The answer is no.
We will definitely see more projects building in the yield stablecoin space. And there will be different sources of yield - from delta neutral to MEV, AI agents and high-frequency trading strategies. Although not going into the scalability issues of specific solutions, they will have one thing in common - risk exposure (although the specific risks of each source will be different).
This brings us to the next topic – risk isolation.
Risk Isolation
Each source of returns comes with a specific set of risks. For example, in a delta-neutral strategy, the main risks are funding rate volatility (holding perpetual futures can lead to losses, which in turn affects the stablecoin’s peg) and counterparty risk (whether it is a CEX or a DEX).
Other sources also have their own unique risks. When you combine multiple different sources to support a stablecoin, you will face a higher risk of decoupling. Once the peg is lost, the end of the stablecoin will come - we have seen this happen many times in the past. Stablecoins cannot tolerate losses.
If you mix these different sources together, you cant create a stable product.
The solution is to isolate the risk into a separate instrument that will absorb the losses that may occur.
This instrument will be more volatile than stablecoins, but will offer higher returns. In traditional finance, this concept is called tranching.
Resolv takes this approach to curb risk in its revenue streams.
In this case, the stablecoin (USR) is the high-level tier, while a separate token (RLP) acts as the low-level tier. In effect, RLP acts as a scalable, decentralized external insurance fund.
Stablecoin projects typically have some form of insurance fund, but they are internal: they sit in the project’s treasury, are limited in size (you need to raise funds and pay interest for them separately), have low transparency, and are relatively rigid.
Externalized insurance funds, such as RLP, grow with the USR, are self-balancing, transparent, and market-driven.
RLP gets a portion of the total TVL of the protocol (the combined TVL of USR and RLP), and since RLP TVL is only a small portion of that, RLP gets more than expected returns. This effect can be seen as built-in leverage that cannot be replicated without the asset base of USR.
Additionally, RLP is liquid and integrated into lending markets and yield stripping protocols. Imagine having this tool for your delta neutral strategy.
[More context for finance geeks like us: In the future, we may have separate RLP tokens for different types of risk exposure. There may be a “Binance RLP” for credit risk (analogous to credit default swaps in traditional finance), or a “HyperLiquid RLP” for smart contract risk. Entirely new markets and tradable risk instruments could be created from this.]
In short, we are able to strip risk from specific strategies and sell that risk to the market in the form of high-yielding RLP tokens.
By having “above-average crypto-driven returns without the crypto-related risks” in hand, we can increase distribution to more conservative user groups.
distribution
Distribution is critical. This is where the future of crypto competition will be won or lost. Frankly, I think stablecoins will have an advantage here, both in the cryptocurrency space and in traditional finance. In crypto, stablecoins serve as the perfect liquidity flywheel, driving the TVL of blockchains and projects. They already have mature product-market fit.
If you compare stablecoins to structured products in traditional finance, they are better in almost every aspect: liquidity, transferability, capital efficiency (you can use them as collateral and create leverage), and self-custody.
Let’s try to imagine potential users as a continuous spectrum.
On the left are crypto natives, farmers, and power users, and on the right are some old folks who keep cash under their pillows (along with some conservative family offices and hedge funds). As we move along this spectrum, we get to more “sticky” users.
Starting with the liquidity flywheel and crypto-native mechanisms, the goal is to continuously move rightward by penetrating more traditional rails such as neo-banks. This is our main goal in the next few years, as global licensing is gradually advanced and established.
In crypto, network effects provide outsized returns, so being able to convert other market participants into your distribution agents is a huge advantage.
By enabling third parties to participate in yield generation (as strategy sponsors or risk managers), Resolv is expanding the network effect. Look at how Morpho promotes growth by introducing new product opportunities and liquidity through risk managers. Another example is Pendle, where the liquidity flywheel drives project integration, further increasing the network effect.
We see many projects trying to build vertical moats by controlling each stage of value generation, keeping the economic benefits in their own hands, but also becoming unable to cooperate and expand with other projects.
Instead, we will build “horizontal moats” where distribution and revenue generation will benefit all participants. We want to remain as neutral as possible in this process to optimize the best output of the product.
Stablecoins inherently have distribution advantages, and network effects further amplify these advantages.
A note on relevance
There is an “elephant in the room” for any crypto project — that is moat, the ability to keep pace with the market, and stay relevant. We believe this is a huge problem as many projects fade into obscurity after a few years of narrative. To stay ahead of your competitors in the ultra-dynamic crypto market, you must be able to integrate new revenue streams and take advantage of emerging narratives. This is exactly what we enable through our modular approach.
Don’t forget that token incentives are also an important source of crypto yields. Liquidity moves from one project to another, looking for early liquidity incentive drops and huge APYs. By distributing liquidity to a wider range of yield sources (projects), we are able to capture this part as well.
Roadmap
Looking ahead, it’s always exciting to see how big things play out, but there’s still a lot of concrete work to do. Let’s take a look at what’s planned for the next few months.
Our plan is consistent with the key elements mentioned above - these include sources of income, risks and distributions.
The first thing to mention is that we are currently in the process of integrating with Superstate, which is our first example of working with a third-party revenue source, through which we can benefit from more stable and diversified funding rates.
In order to broaden the asset base, we will add BTC as a base asset to our portfolio. Our on-chain focused approach enables us to use different BTC LSTs/LRTs in stablecoin support, so expect more partnerships and higher returns driven by related solutions.
In terms of distribution, our goal is to get our products where the demand is strongest, so expanding to new chains and emerging ecosystems is an important part of our growth. Currently, our TVL on Base has exceeded $150 million, and we are confident in HyperBullish, but more progress is on the way.
Also, don’t forget other distribution channels like wallets and CEXs (more news on this to come soon). Another big source of liquidity comes from crypto projects’ treasury reserves (managed by asset managers like Karpatkey) and funds backing other stablecoins.
