L1 Native Tokens' Final 'Monetary Premium' Is Collapsing!
The monetary premium on Layer 1 (L1) native tokens is rapidly fading as stablecoins increasingly dominate as the preferred medium of exchange (MoE) in on-chain economies.
While L1 valuations historically incorporated a monetary premium derived from their use as a store of value (SoV) or MoE, data shows a clear shift. On Ethereum, ETH is no longer the primary MoE; stablecoins like USDC and USDT now lead in on-chain transaction volume and top Uniswap pools. A similar trend is observed on L2s like Arbitrum.
On Solana, SOL remains the primary MoE due to platforms like Pumpfun and Raydium using it as a quote currency, but USDC is gaining significant traction, especially with new launchpads like MetaDAO adopting it as the default pairing asset. On BNB Chain, USDT has overtaken BNB in trading volume, which had previously been the dominant MoE.
The author argues that the market has chosen stablecoins as the superior on-chain MoE. Attempts by ecosystems to enforce their native token as a quote currency add friction and costs for users with minimal price impact. Improved on-chain UX and liquidity are reducing the historical necessity of using volatile native tokens for transactions. The next wave of users will likely use stablecoins, not native tokens, for everyday exchange, further eroding this monetary premium.
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