┈➤Trump himself
On the surface, Trump seems somewhat willful. However, Trump has become relatively mature in this term.
╰✦A complex character
Trump is actually a rather complex character. First of all, he is a businessman, and the biggest characteristic of business is profit-seeking.
Secondly, he is also a politician. As the President of the United States, he has to consider the federal government's financial revenue, US debt, America's international status, America's economy, namely the stock market, and the US dollar.
Therefore, many of Trump's actions are multi-faceted, not limited to a single purpose.
╰✦ Aiming multiple targets with one arrow
For example, Trump's tariffs can directly bring more revenue to the federal government, and another grand reason is to improve the situation of illegal labor in the U.S., which is also one of the contents of Trump's MAGA. The underlying motivation may be to suppress CN.
For instance, Trump taking Maduro away is actually rooted in historical reasons. Venezuela once detained U.S. oil companies' equipment in Venezuela and expelled these oil companies. Trump's actions can be seen as addressing historical events. One of the core motivations is crude oil; the quality of Venezuelan crude oil is very poor, and oil companies are often reluctant to invest too much money. However, after the blockade of the Strait of Hormuz, the amount of crude oil that can be exported from the Middle East becomes very limited. At this point, Venezuelan crude oil becomes significant. Moreover, with rising oil prices, the cost-effectiveness of oil extraction for oil companies in Venezuela improves. Of course, as an anti-American country and a friendly nation to CN, Venezuela is also one of Trump's targets. In the future, if Venezuela can increase its crude oil supply, it would help lower oil prices, further benefiting a decline in the U.S. CPI, which in turn would be favorable for the Federal Reserve to cut interest rates.
And Trump incorporating BTC into strategic reserves not only fulfills promises made during the election but also encourages the development of the crypto industry. This new industry can bring more economic benefits to the U.S., including GDP and tax revenue. Additionally, the prosperity of crypto is beneficial for increasing the demand for stablecoins, and stablecoins, as an extension of the dollar on the blockchain, can strengthen the dollar to some extent.
┈➤ Trump's crypto products
Trump's company has issued three coins: TRUMP, WLFI, and USD1.
Among them, TRUMP, as a MEME coin, is more about short-term benefits.
WLFI, as a DeFi token, currently focuses on medium-term benefits.
However, USD1, as a dollar stablecoin, may have more long-term economic benefits.
Here we need to carefully consider the name USD1. Logically, WLFI USD could be called WUSD. If it emphasizes pegging to 1 dollar, it should be 1USD instead of USD1.
Brother Bee's personal speculation is that USD1 means USD No.1, USD First, which aligns better with the president's idea of stablecoins.
┈➤ The significance of dollar stablecoins
Dollar stablecoins can be summarized into three main significances, Brother Bee will analyze them from large to small:
╰✦ From the perspective of the dollar
Trump is determined to raise tariffs. After the Supreme Court ruled that his tariff imposition was illegal this year, Trump imposed a 15% tariff on all countries for other reasons.
The negative impact of raising tariffs is that U.S. imports have decreased, as imports must pay more tariffs. On this basis, the trade deficit of the U.S. is likely to decrease.
Throughout history, the U.S. has exported dollars globally through trade deficits. After all, the dollars issued by the Federal Reserve cannot be directly given to other countries, so these dollars must be spent in international markets to complete the international output of dollars.
As the trade deficit decreases, the output of dollars also reduces. At this time, dollar stablecoins can output dollars globally on the blockchain.
╰✦ From the perspective of the federal government
The issuance of dollar stablecoins requires equivalent assets as backing, including dollars and U.S. Treasuries. U.S. Treasuries are one of the main collateral assets.
When the issuance of the dollar stablecoin increases, there will be more demand for U.S. Treasuries.
The issuance of U.S. Treasuries is done in the form of Dutch auctions, where bids are arranged from low to high according to interest rates, and the final interest rate that completes the sale amount is the interest rate for this round of U.S. Treasury issuance.
For example: this round issues $60 billion of 10-year U.S. Treasuries.
A bids: interest rate 2%, total purchase of $10 billion
B bids: interest rate 3%, total purchase of $20 billion
C bids: interest rate 4%, total purchase of $30 billion
D bids: interest rate 5%, total purchase of $25 billion
A, B, and C, these three purchasers, coincidentally purchased a total of $60 billion in U.S. Treasuries. Thus, the final completed amount is C's bid. Therefore, the final interest rate is 4%. D did not buy this round of U.S. Treasuries.
If an E appears now, he is a stablecoin issuer, and the bidding situation changes to this:
A bids: interest rate 2%, total purchase of $10 billion
B bids: interest rate 3%, total purchase of $20 billion
E bids: interest rate 3%, total purchase of $30 billion
C bids: interest rate 4%, total purchase of $30 billion
D bids: interest rate 5%, total purchase of $25 billion
At this time, A, B, and E, these three purchasers completed their amounts, and the final interest rate is 3%. The interest rate of U.S. Treasuries has decreased.
You may ask why E does not bid 4%. In fact, if E bids an interest rate of 4%, E and C can only purchase $30 billion in total, and E can only buy $15 billion of U.S. Treasuries, which cannot meet its demand.
Therefore, when there is more demand for U.S. Treasuries, it is beneficial to lower the interest rates of U.S. Treasuries, thereby reducing the financing costs of U.S. Treasuries, which is beneficial for alleviating the fiscal pressure on the U.S. federal government.
╰✦ From the perspective of the Trump family
Finally, the smallest ones reached the Trump family. USD1 can bring continuous benefits.
For example, accepting deposits while offering loans, collecting minting taxes, etc., can all bring benefits to stablecoins.
In addition, the U.S. Treasuries collateralizing the stablecoins will also bring benefits to the stablecoin issuing companies. USDT and USDC have kept this portion of the profit. From recent activities, USD1 appears to use this portion of profit to provide benefits to users.