Y Combinator identified 20 specific areas in its latest Request for Startups list, potentially signaling upcoming investment trends.
The venture fund, known for backing early-stage tech startups, highlighted stablecoin finance as one of its key investment areas.
Stablecoins are a type of cryptocurrency designed to minimize price volatility. They achieve this by being pegged to a stable asset, such as a fiat currency like the US dollar or a commodity like gold.
“There’s been much debate about the utility of blockchain technology, but it seems clear that stablecoins will be a big part of the future of money,” YC Partner Brad Flora wrote in a blog. He added that YC-backed companies are already using stablecoins for various purposes, including reducing fees and fraud in cross-border payments and shielding users from hyperinflation.
“This utility is so straightforward it seems inevitable traditional finance will follow suit,” he added.
The well-known incubator Y Combinator issued 20 requirements for startups, mentioning stablecoin finance: US$136 billion in stablecoins have been issued, but the opportunity seems to be much greater; about 7 million people have used stablecoins, and more than 500 million people…
— Wu Blockchain (@WuBlockchain) February 19, 2024
Big Names Signal Mass Market Shift
Flora pointed to key players’ recent actions, including PayPal’s stablecoin launch and major banks’ exploration of custody services, as signs of growing acceptance of stablecoins within the financial landscape.
Flora sees stablecoin adoption following a similar path to digital music, transitioning from early, unregulated usage to mainstream adoption. Spotify emerged during this transition period and ultimately surpassed earlier players.
Stablecoins Offer Lifeline in High-Inflation Countries
Despite $136b in stablecoins already issued, the real potential seems much larger. With over 500m people facing inflation above 30%, only 7m have used stablecoins so far, hinting at untapped opportunities, according to the accelerator.
For instance, the inflation rate in Venezuela stood at 107.40% as of Jan. 2024. Mauricio Di Bartolomeo, co-founder of crypto lender Ledn, told Cryptonews recently that stablecoin usage among his family and friends in his home country Venezuela is rising significantly.
This prompted him to suggest that stablecoins are gradually eroding the established financial system.
Y Combinator’s Ambitious Agenda Includes Cancer Cure
“US banks hold $17T in customer deposits which are all up for grabs as well. And yet the major stablecoin issuers can be counted on one hand and the major liquidity providers with just a few fingers,” Flora said.
Y Combinator is on the hunt for proposals from teams developing B2B and B2C products using stablecoin technology, in addition to tools, platforms, and novel stablecoin protocols themselves.
Its investment focus spans various sectors, including AI, robotics, spatial computing, and climate tech. One of its other ambitious goals is to find a cure for cancer.
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