A new project by Tether co-founder Reeve Collins has recently listed on major exchanges including Binance Alpha, Kraken and ByBit, a stablecoin (STBL) that is attempting to disrupt how onchain finance is using blockchain technology to settle in good old fashioned treasuries.
CN: What is STBL and how does STBL differentiate itself?
RC: STBL’s architecture was purpose-built to bridge the tension between regulatory clarity, user privacy, and the necessity of censorship resistance onchain. Reserve data is published onchain, granting both regulators and users complete transparency. Compliance is enforced at the custodian layer through licensed entities, but privacy is preserved for end users. Critically, STBL leverages zero-knowledge tools to permit verification without disclosing sensitive details. Yield-splitting is central: when collateral is posted, two tokens are minted, USST (stable payment token) and YLD (yield NFT). KYC and whitelisting are applied at the interface with regulated yield, ensuring securities compliance, but USST circulates freely as digital cash. This model keeps the payment rail open and self-custodial, while respecting the regulatory perimeter for income streams, seamlessly merging transparency, privacy, and compliance.
CN: Where does your liquidity come from?
RC: Historically, intermediaries such as brokers, custodians, and managers are required for purchasing and holding Treasuries. Tokenization transforms this. Today, tokenized products (RWAs) bundle those steps into programmable assets. STBL doesn’t replace tokenization firms, it supercharges them. Companies like BlackRock, Franklin Templeton, Ondo, and Centrifuge provide the tokenized RWA building blocks. STBL then enables users to post these RWAs as collateral, minting USST and YLD: transforming passive assets into a stable payment token and a separate yield token. This is not a marginal upgrade; it is the creation of an entirely new digital monetary layer, unlocking capital efficiency and providing a true composable DeFi foundation atop institutional-grade collateral.
CN: How does this execute onchain?
RC: STBL (STBL) uses a tri-token system: USST (payment), YLD (yield), and STBL (governance), was engineered to align incentives across the ecosystem. Traditional corporate equity pits shareholder gains against user benefit. STBL dissolves this dichotomy: about 80% of value accrues directly to minters of USST, with roughly 20% reserved for protocol overhead, much of which is redistributed to the community through STBL governance mechanisms such as buybacks and burns. This eliminates typical rent extraction by a central operator and empowers users as owners and decision-makers. It’s a true Web3 model: the network’s value flows to active participants, not passive equity holders. Whether as a transactor, minter, or governor, every participant is structurally rewarded for engagement in the protocol.
CN: Can you quantify productivity gains from real-time yield accrual within stablecoins, and are there risks to embedding yield within your stablecoin architecture?
RC: In traditional finance, yield on Treasuries or money market funds is distributed monthly or quarterly, which delays compounding and leaves capital idle between payout dates. Tokenization changes this dynamic. Many issuers of tokenized Treasuries now support continuous accrual, so yield begins working the moment collateral is posted onchain. That makes capital more productive and allows compounding to start instantly rather than waiting for the next distribution cycle.
STBL builds on this capability but keeps yield and payments separate. USST is a simple, stable payment token, while YLD carries the income. This separation preserves the efficiency of real-time accrual where the underlying asset supports it, while insulating the stablecoin from the complexity and risks of embedding yield into every transfer. Most importantly, it also ensures that USST does not cross into the definition of a security. By separating income into YLD, which is treated as a regulated security, STBL keeps the payment token free of that risk and maintains its role as stable, widely usable digital cash.
CN: How does STBL manage composability risk as stablecoins are recursively used as DeFi collateral? What are the underestimated failure modes?
RC: DeFi’s composability amplifies both power and peril: protocols stack dependencies, and a shock in one can echo across many. The key risk is in the stablecoin peg, departure from $1 undermines every primitive built atop it. STBL secures this foundational layer by holding all reserves transparently onchain, with over-collateralized, market-neutral assets like U.S. Treasuries. Yield is isolated in YLD to protect the peg from volatility. Collateral is continuously rebalanced for immediate redemption. Crucially, there is no opaque off-chain bank dependency or single-entity risk. This radically reduces systemic composability risk: STBL provides a transparent, sovereign-backed anchor for all of DeFi, limiting the chances of a single event triggering multi-protocol failures.
CN: What is the most common design failure in algorithmic stablecoins, and how does STBL structurally avoid reflexivity collapses that can reverberate across multiple aspects of the business?
RC: The core failure of algorithmic stablecoins, exemplified by Terra, was reliance on market confidence without actual collateral. Trust evaporated, and the peg collapsed through reflexive feedback. STBL rejects pure algorithmics; its peg is explicitly collateralized, over-backed by verified real assets and managed through robust peg logic. The protocol maintains hard asset reserves, not just incentives and promises. Thus, even if market sentiment falters, actual value is always on-chain to satisfy redemptions, precluding the possibility of a destabilizing death spiral.
CN: With increasing fragmentation across chains and bridges, how does STBL ensure robust pegs and liquidity?
RC: Bridges are a serious attack surface; billions have been lost to cross-chain exploits since 2021. STBL mitigates this by focusing on native issuance: USST is minted directly on every supported chain but always references the same, unified collateral pool. This prevents fragmentation and exploits via bridges. Zero-knowledge proofs further enhance integrity, while relayers are economically bonded and slashable for misbehavior. Transparency of onchain collateral is the foundation for trust, not fallible bridge operators. This approach is fundamentally stronger than existing multi-chain stablecoins, whose collateral may be obscure or corporate-controlled.
CN: Does onchain transparency enable adversarial MEV and bot attacks on stablecoin liquidity? What measures has STBL implemented to accounnt for these?
RC: Onchain transparency, while critical for trust, exposes activity to MEV bots, which can extract value or disrupt stability around liquidity pools. Complete immunity is impossible, but STBL minimizes risk by isolating stablecoin function from yield accrual, keeping USST simple and robust against manipulative attacks. We also reduce exposure by minimizing predictable flows and, where needed, using techniques such as batch auctions, randomized execution, or dynamic fees to blunt bot strategies. The protocol’s risk controls focus on ensuring MEV cannot endanger the peg or system solvency, accepting some surface arbitrage as inherent in open infrastructure.
CN: What about the geopolitical risks facing stablecoins. Do you see any dangers on that horizon?
RC: The Tornado Cash sanctions in 2022 made this clear. Circle blacklisted addresses holding USDC the moment OFAC acted, showing that stablecoins are exposed not only to market volatility but also to geopolitical shocks.
STBL addresses this by keeping reserves in U.S. Treasuries that are transparent, liquid, and held with multiple custodians. Even if one custodian is disrupted, the Treasuries remain intact and redeemable. Governance can adjust exposure to different maturities and custodians if conditions change, ensuring the system remains resilient under political stress.
On a macro scale, stablecoins are already geopolitical instruments. In high-inflation countries, they provide a lifeline for savings and remittances. At the state level, governments are developing CBDCs as a way to reinforce sovereignty and reduce reliance on foreign-controlled financial infrastructure. Stablecoins and CBDCs will increasingly be part of the toolkit in sanctions, counter-sanctions, and broader global competition.
CN: What about on level of nation state adoption? Will stablecoins be in the arsenal of every Central Bank within the next cycle?
RC: Nation-scale adoption means massive throughput, real-time settlement, and integration with central bank systems. Architecturally, that requires modular layers: a base protocol for transparency and collateral rules, with sovereign or enterprise layers on top for distribution. Reserves must include sovereign-grade assets.
Decentralization does not have to vanish. Governance and collateral oversight can stay open, while distribution adapts to each jurisdiction. The result is a hybrid: stablecoins as public infrastructure with sovereign skins.
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