Stablecoins are the foundations that are required to build a successful DeFi ecosystem. This section describes how much of the industry already depends on stablecoin functionality and why Kaspa cannot build a lending market or an exchange of any depth without a dollar of its own.
The total worth of all stablecoins in circulation were worth close to about 300 billion USD, with Tether’s USDT at 182B USD and Circle’s USDC at 72B USD.
In accordance with a16z State of Crypto 2025 report, stablecoins moved about 46T USD in the 12 months to October 2025, nearly 3x the volume of Visa. *Even after accounting for bot activity and internal transfers, the adjusted figure was 9T USD.
A trading pair needs a stable quote asset. On DEXs, stablecoins traded 161B USD in the 30 days to 12 October 2026. Without a stablecoin, a Kaspa exchange can only quote KAS against other volatile assets, meaning there would be no stable asset to take profit in, without leaving the Kaspa network.
On Aave, the largest lending protocol, stablecoins make up about 7.5B USD out of 12.3B in active loans, or roughly 61%. This is a way for people to deposit volatile assets as collateral and borrow dollars against them. That is also the mechanism that we envision to build.
A lending market gives KAS holders a way to spend without selling. A holder who needs dollars locks KAS in a vault and mints KSD against it, so the dollars arrive while the KAS stays theirs. Spending that would otherwise be sell pressure becomes locked supply instead: every KSD in circulation keeps at least twice its value in KAS out of the market for as long as the loan is open, and some of the minted dollars return to buy more KAS. So the net economical effect is that we have less Kaspa in circulation whilst still allowing it to be used for trade.
KaspaDollar follows the overcollateralized design introduced by MakerDAO’s SAI in 2017 and refined by Liquity in 2021: users lock a volatile asset and mint a dollar against a fraction of its value, and the protocol liquidates positions that fall below a published threshold. Nobody holds reserves, nobody can freeze a balance, and the backing can be verified on chain by anyone. The design has been stress-tested through several market cycles. Its weak points are known, and the how it works page describes how this project handles them and where its limits are.