Tether co-founder Reeve Collins is stepping back into the stablecoin market with the launch of a decentralized stablecoin designed to compete with Tether’s USDT. The new project, Pi Protocol, aims to disrupt an increasingly competitive sector of the cryptocurrency industry by offering a yield-bearing model backed by real-world assets (RWAs).
What Is Pi Protocol?
According to a Feb. 18 Bloomberg report, Collins is now chairing Pi Protocol, a decentralized finance (DeFi) project set to launch later this year on the Ethereum and Solana blockchains. The protocol will introduce the USP stablecoin, which will be minted through smart contracts in exchange for yield-bearing USI tokens.
Pi Protocol claims that USP will be backed by bonds and other RWAs, but specific details about its fiat backing remain unclear. Despite its name suggesting a US dollar peg, Pi Protocol has not confirmed whether USP will be pegged solely to USD or include other currencies.
“Yield-bearing assets will attract more investors who want to earn interest on their fiat-pegged tokens,”
Collins had earlier stated to Cointelegraph about working on a new type of stablecoin.
Tether’s Legacy and Collins’ New Challenge
Collins played a crucial role in developing Tether (USDT) in 2014 before selling it to the operators of crypto exchange Bitfinex in 2015. Since then, Tether’s market value has skyrocketed from under $1 billion to a staggering $142 billion, solidifying its dominance in the stablecoin sector.
Despite its success, Tether faces growing competition from new and existing players, including Circle’s USDC, Ethena’s USDe, and Dai (DAI). Pi Protocol’s entry into the market signals a new wave of innovation, with decentralized stablecoins gaining traction.
The Expanding Stablecoin Market
The stablecoin market has exploded in recent years, with more than $225 billion worth of stablecoins currently in circulation, according to DefiLlama. Notably, USDC’s growth has outpaced USDT’s in early 2025, while Ethena’s USDe has surpassed DAI to become the third-largest stable asset by market capitalization.
Stablecoins play a critical role in the cryptocurrency ecosystem, offering liquidity and transactional efficiency for buying and selling digital assets. They are also gaining momentum in cross-border remittances, providing a cost-effective alternative to traditional money transfers.
A recent ARK Invest report highlighted this trend, revealing that stablecoin transaction volume reached $15.6 trillion in 2024, surpassing both Visa and Mastercard in transaction value.
What Pi Protocol’s Stablecoin Could Mean for the Market
Pi Protocol’s USP stablecoin introduces a novel yield-bearing model, which could appeal to investors looking for passive income opportunities. If successful, USP could carve out a unique position in the stablecoin landscape, challenging Tether’s USDT dominance and further diversifying the sector.
As the demand for decentralized financial solutions continues to rise, projects like Pi Protocol could pave the way for a more transparent and efficient stablecoin ecosystem. However, regulatory scrutiny and the need for trust in collateral backing remain crucial factors in determining the long-term success of these new entrants.
Conclusion
Reeve Collins’ return to the stablecoin market with Pi Protocol marks a significant development in crypto’s evolving financial landscape. As competition intensifies, the success of Pi Protocol’s decentralized, yield-bearing stablecoin model could redefine the way stablecoins operate. Whether it can dethrone USDT or carve out its niche remains to be seen, but one thing is clear—the stablecoin wars are heating up.
Related: Tether’s Legal Chief Stuart Hoegner Retires Following MiCA Regulations
