The Genius law is expected to drive the global use of Stablecoin to new heights. With an already established market domain position, Ethereum will benefit disproportionately from this transition.
In a conversation with Beinypto, Sanjay Shah, a researcher at the Electric Capital Risk Capital firm, emphasized that the Ethereum block chain has unique architectural advantages that will reinforce the role of the network as the fundamental layer for the incoming economy of Stablecoin.
Ethereum market domain
When the president of the United States, Donald Trump, signed Genius law last month, triggered an important price recovery throughout the cryptocurrency market.
However, Ethereum’s performance had no comparison. He experienced the most positive and sustained effect, surpassing any competitor after immediate sequelae.
In the days prior to the approval of the bill, the price of Ethereum increased, rose more than 20% and exceeded the $ 3,500 mark. The impulse continued even after the invoice was signed, with the value of the network reaching a maximum of $ 3,875 the following week.
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At the time of writing, its price is based on $ 4,465.
This powerful market reaction reinforced investors’ confidence in Ethereum’s ability to capitalize on a new regulatory environment.
The Genius law has effectively eliminated important obstacles, racing the path for a broader stable adoption and easier global access to the US dollar, and investors bet on Ethereum to lead the way.
Will Genius law make Ethereum a financial anchor?
Stablecoins will become a central component of the global financial system, which serves as a conventional dollar railroad for several transactions, from savings and payroll to cross -border payments.
The regulatory clarity provided by the Genius Law is the key to unlocking this generalized adoption, which allows regulated institutions to issue and use established with confidence.
According to Shah, this transition will establish a new open financial infrastructure, with Ethereum acting as an anchor.
“The regulated emission will unlock the distribution through banks and fintechs. Ethereum can anchor the open and global side of that system, with L2S that handle the high performance and L1 activity that provide security and purpose. Eth the ASSET can serve as the collateral neutral and productive reserve that the reserve collateral and other services in the finance pile,” Beinypto said.
Since Ethereum already houses the majority of Stablecoin’s liquidity, the lion part of this greater activity will capture.
Why Ethereum is positioned to lead
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The existing strength of Ethereum is based on three crucial key properties for global institutional adoption: global accessibility, security for institutions and resistance to government interference.
The approach of legislation in compliance and security reinforces these qualities, attracting more participants to the orbit of the network. As it is, Ethereum already orders the market.
According to recent deficama data, Ethereum is responsible for more than 52% of the Stablecoin market capitalization of $ 278 billion.
“Ethereum can win the genius law disproportionately because it already dominates the parts of the cryptographic economy that is likely to accelerate [like] Stablecoins backed by USD and the financial services that grow around them, ”said Shah.
In addition, he reinforced this point by saying that growth will naturally deviate towards the established leader:
“Since Ethereum already houses most of Stablecoin’s emission and liquidity, much of that growth can flow to its ecosystem, reinforcing the leadership it already has.”
However, the incoming wave of the demand of stablcoin will inevitably exerts greater pressure on the networks to process the transactions effectively. This reality presents a significant challenge for Ethereum given its history of scalability problems.
According to Shah, you can easily reach the occasion.
L2S: address the scalability problem
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Ethereum’s scalability problems have been a well -known concern in the cryptographic industry. Its main netnet has traditionally limited itself to processing a small number of transactions per second, which often leads to the congestion of the network and high rates of transactions during high demand periods.
As the genius law enters into force, the anticipated boom in the use of Stablecoin will exert unprecedented pressure on the capacity of the network.
According to the public statements of Vitalik Bugerin and the Ethereum Foundation, the long -term response of the network to end a history of scalability challenges lies in Layer 2 (L2S) solutions.
These L2S process most of the consumer and institutional stablcoin transactions in a highly efficient and low cost. This approach ensures that the network can handle mass adoption without compromising its basic principles of decentralization and security.
The Ethereum Mainnet (L1) will fulfill a different but equally critical role as the secure settlement layer, handling the purpose of the transactions processed in the L2S.
According to Shah, this synergy is what makes the scale solution viable.
“Most of the performance of the consumer and institutional stable is designed to live from Ethereum L2s (for example, basis, optimism, referee), with L1 acting as the settlement and safety layer, so the scale comes from the rolls while preserving the guarantees of Ethereum trust,” he said.
He also pointed out the flexibility and benefits that this system offers to institutions:
“The current accumulation architecture is built for high -volume and low -cost payments and financial applications, and allows institutions to choose correct compensation (performance, rates, compliance characteristics) without leaving Ethereum’s security umbrella.”
Despite the increase in competitive block chains, Ethereum’s domain can remain firm in the light of this improved infrastructure.
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What should happen to eliminate Ethereum?
While the chains of rival blocks like Solana and Tron have made incursions into the Stablecoin market, it is unlikely that their challenge to Ethereum’s dominance will be successful in the long term.
The long -term success of a network in finance depends on its fundamental qualities. Decentralization and security create a virtuous cycle that attracts capital and talent. Ethereum’s proven security record and decentralized nature encourage an institutional confidence environment, which is based on large capital groups, creating deep liquidity.
This rich ecosystem attracts developers to create financial applications and services on the platform. Shah argues that these central factors hinder Ethereum’s position.
“Speed and cost are also important factors, but without the same decentralization, security history and institutional customization options, it may be difficult to dislodge Ethereum leadership in finance.”
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This reality presents a convincing case of why regulated institutions may feel more inclined to choose Ethereum, although they can now launch their own private stable.
The path of the slightest friction
Although traditional financial institutions can explore the launch of their own private block chains, they can gravitate towards open public networks.
“Some banks will pilot owners or permits, but the liquidation liquidity tends to join where the counterparts are already. Private networks generally return to where the liquidity is clarified,” Shah told Beinypto.
Although the Genius law opens new opportunities for institutions, the launch and operation of a private stable requires a substantial operational commitment.
“The law reduces the barrier for banks and fintechs to emit, but the path of the slightest friction can continue to emit, or at least interopening with the Liquidity Centers of Ethereum and L2 to access global counterparts and composite finances,” he added.
According to current trends, all signs suggest that Ethereum will strengthen its position as the primary settlement layer for digital dollar transactions. The growing price of asset and growing institutional interest in the network reinforce such a trajectory.
