Today, most stablecoin TVL sits in liquidity pools and lending protocols, ready to move at a moment's notice. This creates unpredictable swings for stablecoin issuers as billions can enter or exit protocols instantly. Through Glue, this dynamic will change fundamentally.
When projects use Glue, stablecoins move from liquid TVL to backing TVL. Instead of sitting in pools ready for instant withdrawal, these stablecoins back project tokens and can only exit gradually through token burns. This creates a more predictable and stable environment for stablecoin issuers.
Consider how stablecoins flow in DeFi today. A billion USDC in a lending protocol could exit overnight if yields drop. But when that same billion backs project tokens through Glue, it can only exit when token holders choose to burn - creating natural rate limiting on outflows.
This transformation makes stablecoin TVL more predictable. Instead of facing sudden liquidity movements, issuers can watch backing gradually change as tokens are burned or new revenue is added. The more projects use Glue, the more stable this TVL becomes.
The key difference is that backing TVL through Glue isn't just locked - it's tied to token burns. This creates natural friction against mass exits. Even if token holders want to access the backing, they must burn their tokens to do so, preventing the sudden liquidity swings that plague current DeFi.
For stablecoin issuers, this means:
As more projects adopt Glue, an increasing portion of stablecoin TVL will shift from liquid to backing. Each successful project will create more backing TVL through their revenue. This backing TVL provides more stability than liquid TVL because it's tied to token burns rather than instant withdrawals.
The ecosystem becomes naturally more stable as backing TVL grows. Stablecoin issuers gain better predictability. Projects get sustainable backing. Everyone benefits from increased stability.
This is how stablecoin TVL should work - becoming more stable through backing rather than remaining perpetually liquid. Through Glue, the ecosystem can evolve from its current state of instant liquidity to one of sustainable, predictable backing.
For stablecoin issuers, this creates a future where TVL becomes an asset rather than a liability. Instead of worrying about sudden outflows, they can focus on growing their ecosystem, knowing that backing TVL provides natural stability through burn mechanics.