Y Combinator Anticipates Surge in Stablecoin Startups, Issues Funding Criteria
In Brief
Y Combinator plans to fund stablecoin focused B2B and consumer product startups, anticipating increased engagement in stablecoin as category.
Technology startup accelerator Y Combinator issued requirements for stablecoin startups, anticipating increased engagement in this specific category. Y Combinator plans to fund teams focused on developing business-to-business (B2B) and consumer products leveraging stablecoins and tools and platforms facilitating stablecoin finance. Furthermore, the accelerator aims to back projects involved in creating stablecoin protocols.
According to the firm, “$136 billion worth of stablecoins have been issued to date, but the opportunity seems much more immense still.”
To date, only approximately 7 million individuals have engaged in transactions involving stablecoins, even though over half a billion people reside in countries experiencing inflation rates exceeding 30%. The United States banks currently hold a substantial $17 trillion in customer deposits, representing a considerable market opportunity.
The accelerator further noted that only a few prominent stablecoin issuers and liquidity providers currently dominate the landscape.
Stablecoins will play a substantial role in the future of currency. This conviction is grounded in the practical application of stablecoins by Y Combinator companies over the years, effectively incorporating them for purposes such as cross-border payments, mitigating transaction fees and fraud, and safeguarding users’ savings from hyperinflation.
The simplicity and effectiveness of these applications make it inevitable that traditional finance will follow suit–PayPal has recently issued its stablecoin. At the same time, major banks have started offering custody services and expressing interest in allocating their stablecoins.
A Focus on Crypto Investments
Y Combinator is a startup incubator that guides founders during the initial phases of their projects before committing to a seed investment. Renowned for its early support of highly successful startups such as OpenAI, Airbnb, and Reddit, Y Combinator has a track record of identifying and backing impactful ventures. Its crypto alums include Coinbase, OpenSea and Protocol Labs.
Venture capital activity, often indicative of cryptocurrency market trends, has recently shifted notably. According to a recent Pitchbook report, venture funding for companies in the cryptocurrency sector reached $1.9 billion in the fourth quarter of 2023 — a 2.5% uptick from the preceding quarter, marking the first time venture capital investments in cryptocurrency startups have risen since March 2022.
Y Combinator’s strategic focus on stablecoin startups, the growing global interest in stablecoins and the evolving landscape of venture capital investments in the cryptocurrency sector collectively highlight the increasing significance of stablecoins and their potential impact on the future of currency and financial technologies.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
