Crypto has long promised a global financial system. Yet in practice, almost the entire on-chain economy runs on one currency: the United States dollar. Other fiat-linked stablecoins exist, including those pegged to the euro, Singapore dollar, Brazilian real, Japanese yen, and British pound.

But their on-chain presence is so small that it barely appears in system-wide charts. This week, two discussions explained why. One came from 0xAishwary, who has spent the entire year deploying foreign-exchange stablecoin pools. The other came from Artemis firm, whose stablecoin-supply chart went viral for showing the overwhelming dominance of USD-denominated assets.

These perspectives show that non-USD stablecoins are not failing because demand is absent. They are failing because existing liquidity infrastructure punishes anyone who tries to support them.

• The Pool That Broke Overnight
• Understanding Impermanent Loss
• What The Data Shows
• Why Polygon Became The Hub
• The New IL-Recovery Idea
• Why Solving This Matters

The Pool That Broke Overnight

Aishwary recently deployed a pool between XSGD and USDC. XSGD is a regulated Singapore-dollar stablecoin. The pool was created with a narrow concentrated-liquidity range that matched the real SGD to USD trading band. Nothing appeared risky.

The pool broke almost immediately. A routine shift in the SGD to USD exchange rate pushed the pair outside the selected range. This is normal in global FX markets.

On-chain, however, this small movement triggered a cascade. Arbitrage bots entered instantly, drained the XSGD side of the pool, and left only USDC behind.

By morning, the LP was left with real monetary loss. Fees earned were nowhere close to compensating for the harm. The entire XSGD allocation had vanished. This outcome is common for almost all non-USD pools deployed on AMMs.

One of the biggest challenge for non-USD stablecoins is not that that their demand doesn’t exist, it’s that they are volatile in nature.

As someone who has been constantly working on fx on chain this entire year, and keeps deploying multiple currencies on chain daily, it is a… https://t.co/IRdCkbNynu— Aishwary (@0xAishwary) November 28, 2025

Understanding Impermanent Loss

The core challenge is impermanent loss. Impermanent loss is the difference between holding two assets outside a pool and holding them inside a pool after their price relationship changes.

AMMs rebalance positions automatically. If one currency appreciates and the other does not, the pool sells the stronger currency and buys the weaker one.

LPs end up with more of the asset that performed poorly and less of the asset that appreciated. In USD-to-USD pools, such as USDC against USDC.e, there is effectively no price divergence. IL becomes negligible.

In FX pairs, the currencies float independently. Even tiny movements create real IL. Bots capture every mispricing. The LP absorbs the loss. This creates an environment where returns cannot be predicted and participation becomes unsafe.

This is the central reason non-USD stablecoins struggle. Once LPs understand that losses are frequent and unpredictable, they exit the pools. When they exit, liquidity becomes shallow. When liquidity becomes shallow, slippage increases. When slippage increases, traders avoid the pool.

When traders avoid the pool, volume falls and fees shrink. Low fees cannot offset IL, and the last liquidity drains. This self-reinforcing cycle has prevented non-USD stablecoins from ever reaching meaningful adoption in DeFi.