🏴 Trustless Stablecoins, Revisited

Institutions are barreling into the stablecoin business; do the trustless crypto-native stablecoin protocols stand a chance?

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Trustless Stablecoins, Revisited Published on Feb 3, 2026 View in Browser gm Bankless Nation, Institutions are barreling into the stablecoin business; do the trustless crypto-native stablecoin protocols stand a chance? Today's Issue ⬇️ ☀️ Need to Know: Vitalik's L2 Reframe The Ethereum founder has a new POV. 🗣️ Analysis: Trustless Stablecoins Return New trustless stablecoin protocols are taking shape. p.s. Thanks to Kraken. Earn variable onchain rewards up to 8% APY with Kraken DeFi Earn. Automated, no wallets, no seed phrases, easy to use. Fees apply. Sponsor: Figure — Win $25k USDC with Democratized Prime. Enter to Win .  .  . NEED TO KNOW Vitalik's L2 Reframe 📗 Vitalik Reframes Ethereum’s L2 Narrative. In a new post, Vitalik says Ethereum L2s need a new role as the L1 scales faster, urging rollups to differentiate beyond “just scaling.” 🏈 Crypto.com Releases In-House 'OG' Prediction Markets. The platform hopes to capture volumes days ahead of Super Bowl LX. 🏡 89% of Family Offices Hold No Crypto: J.P. Morgan. The bank's 2026 survey of 333 family offices found 89% have no crypto exposure, with only 17% planning to invest going forward. 📸 Daily Market Snapshot: Crypto stocks got hammered on another tough day for the crypto market as BTC hit a new 1-year low, ETH nearly broke below $2,100 and the vast majority of top-100 coins are down more than 10% on the week. Prices as of 4pm ET 24hr 7d Crypto $2.55T ↘ 3.5% ↘ 13.0% BTC $76,675 ↘ 2.0% ↘ 14.1% ETH $2,316 ↘ 0.7% ↘ 23.2% .  .  . ANALYSIS Trustless Stablecoins Are Back in the Spotlight Bankless Author: William M. Peaster Stablecoins are the plumbing of DeFi – yet most of today's stablecoin supply streams are tethered to a world defined by TradFi approaches. When a stablecoin is custodial, you inherit the issuer’s worldview and legal pressures, and the blacklisting risks that come with them. And if a stablecoin has external reserve dependencies, like being backed by real-world assets (e.g. U.S. Treasury bills), holders don't get direct, onchain redemption rights to the underlying asset. This is why trust-minimized stablecoin protocols matter: They run on immutable code. They use crypto-native collateral. And they offer redemptions via onchain mechanisms. We've seen various trustless stables projects over the years, including Maker's Single Collateral DAI, Reflexer's RAI and HAI, and Curve's crvUSD, but none have seen breakout success so far. But this niche is getting interesting again as newer designs are paving fresh paths forward. Today, we're taking a look at three of the more recent shots on goal in this vertical: Liquity V2, Money League, and Polaris. 💧 Liquity V2 Liquity V1 earned its reputation by being stubbornly narrow. It runs on immutable contracts, only supports ETH as collateral, and largely eschews governance. Liquity V2 kept that DNA but widened the design space when it launched in 2025. Now, the borrowing protocol lets users deposit ETH or liquid staking tokens like WETH, wstETH, and rETH to mint BOLD, a USD-pegged stablecoin. Beyond this expanded collateral support, V2 also introduced user-set interest rates. Instead of governance deciding borrow rates, V2 borrowers choose their own, and the protocol uses those market rates as a core stabilizer for BOLD. You can think of this like a market-driven monetary policy system that responds to BOLD being above or below $1. Additionally, the V2 routes its economic flows back to users, and does so via two avenues that are meant to be sustainable: Stability Pools (“Earn”): Deposit BOLD here to earn yield sourced from borrowers' interest payments plus liquidation gains. Protocol-Incentivized Liquidity ("PIL"): A hard-coded slice of revenue supports BOLD liquidity, directed by LQTY stakers via gauge voting. The result of these elements is a project that aims to turn stablecoin stability into a competitive onchain market. The model is readily extensible, too, via Liquity's Friendly Forks program, which allows other teams to deploy their own licensed stablecoins using the V2 framework. 💸 Money League Want to deploy a custom stablecoin, but you don't have the technical know-how to manually fork the Liquity V2 codebase or you don't want to enter a licensing agreement to do so? This is where Money League has positioned itself. It's an EVM platform that's being designed so anyone can readily deploy censorship-resistant stablecoins through a factory model. Instead of teams needing to design an entire bespoke stablecoin protocol from scratch, Money League will provide standardized plug-and-go modules derived from the RAI/HAI stables lineage. In other words, the protocol will let you handpick your stablecoin's supported collateral (e.g. ETH only), peg mechanics (e.g. floating), risk parameters, and beyond. From there, your deployment will operate as its own independent stablecoin protocol. In addition, all deployments will be linked through a shared incentive layer built around the MERIT token, which can be redeemed for Money League treasury assets. Stablecoins will compete for emissions by routing fees or offering incentives to gauge-style veMERIT voters, so successful designs should attract more liquidity and attention. Instead of yet another stablecoin aiming for perfection, Money League is striving to foster many stablecoin experiments in parallel, creating a market where the best designs win liquidity, legitimacy, and distribution. 💫 Polaris The newest arrival in the trustless stables category is Polaris. In its early stages, this stablecoin protocol will be fully onchain, and instead of generating yield from external RWAs, it will do so by harvesting internal volatility around its pUSD and pETH tokens through a special bonding curve mechanism. As adoption around Polaris grows, the system's own onchain activity increases, so the central yield source scales upon expansion rather than being compressed away as is often seen with RWA-centric stablecoins when their deposits grow. The second central idea here is that Polaris is also openly positioning itself as forkable stablecoin infra, where many stable assets (like pGOLD) can share the same pETH collateral base and grow together as a mutualistic constellation. For now, we'll have to wait and see how Polaris fares in the wild – how its bonding curve operates, how its system behaves under stress, etc. But the builders are certainly posing an ambitious new crypto-native vision for stablecoins in DeFi, and they're worth rooting for accordingly. Different Approaches Looking at these projects side-by-side, it's immediately clear that they’re not clones of each other. They're in the same general ballpark, of course, but they’re different technical attacks on making better DeFi-native stablecoins: Liquity V2 wants to make a better trustless dollar stablecoin by letting the market set rates and routing revenues toward stability. Money League wants to make stablecoin experimentation cheap and permissionless and to surface the best ensuing performers. Polaris wants to escape the yield scaling trap by harvesting its own onchain volatility instead of relying on offchain RWAs. There’s no guarantee any one of these models wins outright, but that’s besides the point. What matters is that the trustless stablecoins frontier is moving again, and these are the projects that are setting the tone here today and that will (hopefully) inspire the stables of tomorrow during an institution-heavy moment for the sector. Share this Article FRIEND & SPONSOR: FIGURE Use Figure’s Democratized Prime for your chance to win big with $25k USDC. The more you participate, the better your odds! Every dollar gets you another chance to win $25K USDC. Enter to win while earning 9% yield on your crypto with Democratized Prime*. Enter to Win Manage your account Not financial or tax advice. Bankless content is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time to time, we may add links in this newsletter to products we use. We may receive a commission if you make a purchase through one of these links. Additionally, the Bankless team holds crypto assets. See our Investment Disclosures | Terms & Conditions | Privacy Policy Bankless © 2026 – Unsubscribe

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	Forwarded this email? Subscribe here for more Chart Pack: Bears in Control, US Economy on Fire Nik Bhatia Feb 3 ∙ Preview   READ IN APP   Dear Readers, As our quantitative team takes takes a few days off to start February, you’re stuck with me. I’ve been reflecting on where we might have fallen short, and where we got it right, on the bitcoin price lately. In our video last night, Johan and I discussed balancing the emotions and technicals of markets, and it brought about a curious aspect of being a bitcoin investor. Despite our own technical support giving way in November 2025 and a TBL Liquidity Indicator “sell” signal, we want to remain bullish. And it’s in large part because we are believers. Believers that independent, non-liability, first-layer money is valuable in this day and age. Those wondering if the metal version of bitcoin recaptured the heart of global investors need not speculate — it has. But that does not mean bitcoin has stopped following its adoption path as a scalable savings technology for the planet. This is where we find ourselves today. While we wait for TBL Liquidity Indicator to turn from “sell” to “buy” and the technical damage has eventually worn off, we go back to a classic research technique — what we know, and what we don’t know. This helps us organize our thoughts. Lastly, on the TBL Liquidity Indicator switching to “sell” and frontrunning the recent down move in bitcoin, we are somewhat satisfied. We do have to triangulate our timing (and messaging) better, no question about it. But the fact that our Indicator had this one right is encouraging for the framework, even though you’ll see just what a challenge bitcoin’s recent price action has been in relation to the stock market and TBL Liquidity. Gold, on the other hand, is not present in any shape or form within the TBL Liquidity framework, and therefore much less punishing when it comes to analyzing where we got it right and wrong. I went through our Master Chart Pack, which is up to 181 charts. Here are the 15 charts we’ll discuss today: Bitcoin 200-day MA and STH Realized Price Bitcoin MVRV z-score Bitcoin volatility TBL Liquidity versus Bitcoin (wow! 👀) U.S. Treasury 5-year yields Corporate bond credit spreads (high signal) European bond yields U.S. loan growth U.S. ISM Manufacturing (stunning) Zillow real estate data Transportation and warehousing employment Chinese yuan versus U.S. dollar Market value of U.S. gold holdings SOFR/IORB Treasury General Account (TGA) The foundations of money are shifting in ways that are easy to feel but harder to name. Persistent deficits, rising debt, and central bank behavior are quietly reshaping how investors think about preservation and risk. In The Debasement Trade, James Lavish explains why currency debasement is structural, why traditional portfolio assumptions are being tested, and why gold tends to move first while bitcoin often moves further as the implications compound. The report covers: Why debasement is not cyclical How inflation and financial repression stress familiar portfolios Why gold signals early—and bitcoin expresses the shift later, with more asymmetry Download Report Here ❌ DON’T WRITE YOUR SEED ON PAPER 📝 Why? Because securing your generational wealth on paper is risky. It’s estimated that ~30% of Bitcoin is lost forever. Poor seed phrase security is a big reason why. This is why we use Stamp Seed, a DIY kit that enables you to hammer your seed words into a durable plate of titanium using professional stamping tools. Heat-resistant to 3,000ºF, rust-proof, crush-proof, and time-proof Compact and easy to hide No loose parts, such as screws or letter tiles Use code TBL to take 15% off your purchase. Get your Stamp Seed today! Bitcoin & global high-signal charts I’ll keep each description brief to make sure you spend a few seconds with each chart and the underlying message. In this first one, we compare bitcoin’s price to some general collection zones or areas of consolidation, the 200-day moving average ($103k) and realized price but on a short-term holder basis (155 days and under since last moved on chain, currently $96k)... Subscribe to The Bitcoin Layer to unlock the rest. Become a paying subscriber of The Bitcoin Layer to get access to this post and other subscriber-only content. Upgrade to paid A subscription gets you: Exclusive access to the TBL Liquidity Indicator and Live Research Dashboard Actionable levels and price structure analysis for Bitcoin Macro and risk insights that guide positioning decisions   Like Comment Restack   © 2026 Nik Bhatia 548 Market Street PMB 72296, San Francisco, CA 94104 Unsubscribe