Multidimensional Classification Framework of Stablecoins

With the widespread application of stablecoins in various scenarios such as global payments, DeFi, and hedging value storage, it is no longer a concept that can be defined by a single standard. There are significant differences in how different users understand and use stablecoins; it can be a primary tool for cross-border transfers, or it can be a core component of on-chain yield.

This means that the use cases of stablecoins vary from person to person and arise from different needs. Driven by diversified demands, a multi-dimensional classification framework based on user intent, risk trust, and technological architecture has become a key starting point for understanding the stablecoin ecosystem.

This article will start from the user's perspective, attempting to reconstruct the worldview of stablecoins from three dimensions: user goals, risk models, and technical architecture, and build a cognitive framework for stablecoins that truly meets user needs and adapts to usage scenarios.

1. Limitations of Traditional Stablecoin Classification

In traditional narratives, the market has long been accustomed to centering around the "anchoring mechanism," primarily categorizing stablecoins into three types:

1. Fiat-collateralized: such as USDT, USDC, etc., pegged to the US dollar at a 1:1 ratio, with strong liquidity and high acceptance.
2. Crypto-collateralized: Such as DAI, RAI, which maintain their peg through over-collateralization of assets like ETH, emphasizing decentralization and resistance to censorship.
3. Algorithmic stablecoins: such as the collapsed UST, rely on mechanism design and market expectations to regulate prices, without the need for real asset collateral.

In addition, there are stablecoins anchored to non-U.S. dollar assets such as gold and euros, such as Tether Gold ( XAU₮ ). Each XAU₮ token represents one ounce of gold, supporting on-chain transfers and physical redemptions, and is currently stored in a self-built vault in Switzerland by a certain company, with a holding scale reaching 8 billion USD, making it one of the largest private holders of gold in the world.

In the past few years, this classification framework has provided us with an initial understanding of stablecoins. However, in terms of usage, this categorization based on anchoring mechanisms has increasingly struggled to meet the diverse understanding and selection needs of users.

The core reason is that with the breakout of stablecoins, not all users are on-chain traders or DeFi players. This makes it difficult for a single anchoring mechanism to answer the most pressing questions for users: "Is it suitable for me?" "Is it safe to use?" "Can I use it on the chains I commonly use?"

For example, both USDT and USDC are fiat-collateralized stablecoins, but their reserve structures, compliance levels, and market trust differ greatly. At the same time, new regulations ( such as the GENIUS Act and MiCA ) are also using usage and compliance as classification criteria, further making traditional classifications difficult to match actual policy frameworks.

2. The Diversification of Stablecoin User Groups

Recent reports indicate that during the economic downturn since 2020, some developing countries have been hit hard, with soaring prices, depreciation of local currencies, and high unemployment rates, causing many families to face financial difficulties. Stablecoins like USDT can meet the needs of these families to some extent, being used for savings, cross-border remittances, and daily payments.

For this reason, in regions such as Latin America, the Middle East, and South Asia, many users have become global users who are first coming into contact with the crypto world. They use stablecoins due to the devaluation of their local currencies and difficulties with cross-border transfers, and thus only care about its stability, costs, and whether they can cash out at any time.

In contrast, native Crypto players - experienced on-chain users, arbitrageurs, and institutional-level traders, have a completely different focus when it comes to stablecoins. They are more concerned with native liquidity, protocol support, portfolio efficiency, and arbitrage paths, rather than just the anchoring mechanism.

This also means that the differentiation of the user base is becoming increasingly evident, and the stablecoin sector must break out of the traditional framework of "fiat collateral/crypto collateral/algo pegging" when reconstructing classification logic from the user's perspective. From this point of view, the "change" of stablecoins is essentially a result driven by user demand and market ecology.

This includes the explosion of stablecoin application scenarios ( from DeFi staking to cross-border salary payments ), as well as the differentiation of user groups and usage demands ( from capital preservation to high returns ), and the improvement of regulatory frameworks in a macro sense ( from the EU's MiCA to the US's GENIUS Act ). Therefore, in the eyes of users, the stablecoin world has long been divided into several segments:

• Crypto newcomers need a "simple and secure" stablecoin to safely store funds and gradually learn.
• DeFi enthusiasts focus on "yield potential", borrowing and providing liquidity with stablecoins on decentralized platforms.
• Experienced traders seek "extreme liquidity" and need to quickly exchange stablecoins on mainstream exchanges.
• Global users place more importance on "low-cost cross-border payments"; on-chain fees and transaction speed are the core indicators.

The traditional classification system is destined to gradually become ineffective against the backdrop of today's increasingly diverse demands.

In short, there is no "best" stablecoin in the current Web3 world and stablecoin track, only a "most suitable for a specific goal" stablecoin.

III. Building a Multi-Dimensional Stablecoin Worldview

In order for every user to find the stablecoin that is most suitable for them, we propose a stablecoin classification framework consisting of three core axes:

From the user goals (, why use ), how safe is risk trust (, and where and how to use the technical architecture ), aiming to provide a clear picture of each stablecoin, helping users make informed judgments in complex scenarios.

( 1. User Intent and Financial Goals ) Why use ###

This is a classification axis based on user motivations, clarifying the use cases of stablecoins and directly answering the question of "why use them."

As we all know, the functions of stablecoins have long been diversified, with different choices corresponding to different scenarios:

• Payment and value transfer: For example, USDT on a certain platform, low fees, wide coverage, convenient for cross-border remittances.
• Capital preservation and risk hedging: such as USDC, suitable for use as an on-chain dollar account or for hedging during bear markets.
• Yield generation and wealth appreciation: For example, USDe generates native yield through a pegging mechanism and derivative hedging model.
• Uses of Collateral and Leverage: Such as DAI, USDC, USDT, the most commonly used collateral assets in DeFi protocols, facilitating lending and trading.

This classification can directly respond to the most common question from users: I want to do X, which stablecoin should I choose?

( 2. Risk Status and Trust Model) How safe is it###

This determines how much risk users are willing to take when making choices, with core factors including reserve composition, audit status, regulatory licenses, and so on.

The highest tier consists of bank-grade and regulated stablecoins, whose credibility is rooted in government regulation and the traditional financial system, with typical representatives being USDC and PYUSD. Next are market-dominant and systemic stablecoins, such as USDT, whose trust mainly comes from the enormous network effects and unmatched liquidity, although its regulatory status and reserve transparency are contentious.

Again, it is decentralized and on-chain verifiable stablecoins, such as DAI, where users trust the publicly auditable code and community consensus rather than a centralized entity. Finally, there are synthetic assets and algorithm-driven stablecoins representing cutting-edge exploration, such as USDe, whose trust is based on complex economic models, while also accompanied by new risks that have not yet been tested over the long term.

Regulatory rating agencies have rated USDC as "strong" and USDT as "restricted", which also confirms the real basis of this hierarchical framework.

( 3. Technical Architecture and Ecological Adaptation ) Where to Use & How to Use ###

The third classification axis focuses on the technical architecture and ecosystem, which determines "where and how to use" the stablecoin.

The deployment methods on different chains determine their availability, security, and cost structure, among which the distinction between native and cross-chain deployment is crucial. Native stablecoins are directly issued by the authorities, such as USDC on a certain chain, (, making them more secure; cross-chain versions rely on cross-chain bridge mechanisms, which pose the risk of smart contract attacks.

Secondly, an ecosystem dominated by stablecoins determines its core application scenarios. For example, the Ethereum mainnet is more suitable for settlement due to its high security, while certain high-performance L1s attract a large amount of payment and transfer activities with their low fees and high speed. Additionally, some Ethereum L2s, due to their low Gas fees and compatibility with Ethereum, are quickly becoming the main venues for DeFi activities.

This means that users can choose the most suitable version among different networks based on on-chain costs and usage needs.

![Stablecoin Worldview: How to Build a Stablecoin Classification Framework from the User's Perspective?])https://img-cdn.gateio.im/webp-social/moments-b006e91e6c0b9540cd36961beb95d7e1.webp(

Summary

The essence of stablecoin is a tool that serves people.

From traditional classification to a multidimensional worldview, what has changed is not only the classification method but also the service to the actual needs of users. Therefore, there is no all-purpose stablecoin, only stablecoins that fit specific scenarios.

For example, a complete description of USDC would encompass both "capital preservation" and "collateral" attributes in terms of user intent; it belongs to the first tier in terms of risk status, being "bank-grade and regulated"; in terms of technical architecture, it offers a native version across many mainstream L1 and L2 platforms.

This is far richer and more practical than a simple "fiat-collateralized" stablecoin, as it can truly help users understand the trade-offs of different stablecoins in terms of security, yield potential, composability, and trading efficiency, allowing them to make the most informed choices based on their own needs.

In a nutshell, we believe that the ultimate value of stablecoins comes from their ability to "serve people". They should not merely be a derivative of the crypto narrative, but should become the one that is closest to practical use in the user's asset management toolbox.

In the Web3 world, the best choice is always the one that is "suitable for oneself."