Agora’s Van Eck asserts that ‘Yield-generating stables’ do not equate to money or stablecoins.

Stablecoin issuers that offer a yield-bearing element to provide passive income to holders are not focusing on the core mission of stablecoins, according to Nick van Eck, CEO of stablecoin issuer firm Agora. In a Medium post on May 27, van Eck, the son of investment management expert Jan van Eck, argued that these firms should prioritize utility, liquidity, and transaction methods in order to reach a wider audience. He believes that yield-bearing stablecoins may be classified as security products in many countries, limiting their customer base. Van Eck also highlighted that these stablecoins lack the necessary margin to sustain business operations and expand their ecosystems. He further criticized certain stablecoin issuers for having close ties with cryptocurrency trading firms, describing it as a model “rife with conflict of interest.” In contrast, Agora plans to collaborate with various cryptocurrency exchanges, trading firms, and fintech companies when it launches its Agora digital dollar (AUSD) on the Ethereum platform in June. Van Eck sees Tether’s USDT as stablecoin 1.0, followed by Circle’s USD Coin (USDC) and a few other issuers that have improved transparency and regulatory compliance, marking the stablecoin 2.0 era. He hopes that Agora will represent the third iteration of stablecoins, focusing solely on utility, liquidity, and means of transaction. Despite the competitive stablecoin market led by USDT and USDC, which have market caps of $111.7 billion and $32.5 billion respectively, van Eck believes there is still room for new players in the industry. He predicts that the stablecoin industry will expand to $3 trillion by 2030, with a compounded annual growth rate of 70.1%. Agora recently secured $12 million in funding and will fully back AUSD with cash, U.S. Treasury bills, and overnight repo agreements. The reserves will be managed by VanEck, a $90-billion asset management firm where Jan van Eck is CEO.