The $300B Stablecoin Market Has a 'Store-of-Value' Problem—USDi Thinks It's the Fix

As oil prices surge past $100 per barrel amid the Iran conflict and Strait of Hormuz fears, inflation is back in the spotlight with a vengeance. U.S. inflation accelerated to 0.9% last month, driven mainly by energy costs tied to the Middle East conflict, while core inflation came in at just 0.3%—below estimates. Nothing says "geopolitics is back on the menu" quite like watching your grocery money evaporate in real-time.

For Michael Ashton, co-founder of the USDi stablecoin alongside Andrew Fately, the numbers expose a structural flaw in crypto's monetary plumbing that would make any DeFi degens wince. "The stablecoin boom has accidentally rebuilt only half of the monetary system," Ashton told CoinDesk. "Stablecoins solved the medium-of-exchange problem for crypto, but nobody solved the store-of-value problem. USDi is the first serious attempt to finish building the monetary system onchain." Basically, we've got Venmo but no savings account—and everyone's pretending that's fine.

The $300 billion stablecoin market, dominated by dollar-pegged tokens, has become essential infrastructure for crypto trading and payments. But here's the uncomfortable truth: these tokens—typically backed by cash or Treasury bills—are designed to hold a nominal $1 value, not preserve purchasing power. In real terms, they lose value. It's like owning a treadmill that technically works but slowly drifts toward a wall. Functional? Sure. Ideal? Absolutely not.

"As stablecoins graduate from crypto-trading tools to genuine payment infrastructure, the store-of-value gap becomes a real institutional concern," he said. "Treasurers, neobanks, and cross-border payment platforms holding float in stablecoins are quietly taking inflation risk they probably haven't priced." Imagine running a payments company and accidentally becoming an inflation bettor without even trying. That's the current state of affairs.

USDi aims to fill that gap by tracking inflation itself rather than the dollar. Its value increases in line with changes in the U.S. Consumer Price Index, essentially creating a blockchain-native inflation-protected principal. Ashton describes it as closer to the principal value of Treasury Inflation-Protected Securities, minus some drawbacks that have tripped up investors recently. Think of it as TIPS, but actually usable—and without the bond market's delightful habit of losing you money when rates rise.

While TIPS offer inflation linkage, they're still bonds—meaning market prices can drop when interest rates rise. USDi aims to function more like an inflation-linked savings instrument, with reserves invested in a low-volatility private fund called the Enduring U.S. Inflation Tracking Fund, using TIPS, U.S. Treasury debt, foreign exchange, and commodity futures and options. It's like a diversified portfolio that's actually trying to keep up with your rent increases instead of just waving weakly from the sidelines.

"There isn't really an inflation-protected savings account," Ashton said. "That's the gap we're trying to fill." And he's not wrong. Traditional finance has somehow managed to offer everything except the one thing humans actually need: money that doesn't slowly become worth less.

Oil markets have been on a sharp, volatile ride since the Iran war outbreak in late February. Prices initially jumped into the $80s before breaking above $100 as fears grew over disruptions to the Strait of Hormuz—a key artery for roughly 20% of global oil supply. Elevated oil prices can stoke broader inflation through higher transportation and production costs passed on to consumers. Nothing like watching energy prices remind everyone that the global economy runs on fossil fuels and anxiety.

"T-bills are around 3.5%, inflation is around 3%, but historically, inflation has often outpaced short rates over longer periods," Ashton noted. "We may be returning to that pattern." Translation: the "soft landing" narrative might age about as well as buying the dip in 2021.

Ashton frames USDi as more than a tactical play—a structural evolution in crypto that completes what Bitcoin started. "Bitcoin was conceived as an alternative monetary system, and potentially as a store of value like gold," he said. "But its volatility makes it difficult to use that way over shorter horizons. Stablecoins solved the payments side. Now we need to solve the store-of-value side." Bitcoin is the revolution; USDi wants to be the bank account the revolution uses. Fair.

Beyond its core design, USDi plans to offer something Ashton says is difficult or impossible in traditional finance: customizable inflation exposure. CPI is a composite of housing, healthcare, transportation, and education. USDi's architecture could eventually let users tailor exposure to specific components—or even geography: Dutch inflation, French inflation, U.S. core CPI. Imagine being able to bet specifically on healthcare costs going up without having to actually get sick. Futuristic? Slightly dystopian? Both? Absolutely.

"You don't have to hold one aggregate basket," Ashton explained. "You could isolate healthcare inflation, or tuition, or energy." For anyone who's watched their insurance premiums or tuition costs outpace everything else, this is the kind of financial tooling that makes you wonder why it didn't exist already.

This flexibility opens specialized applications. Insurance companies face inflation risk in areas like medical costs but lack precise hedging tools. Traditionally they've managed this by holding more capital or transferring exposure through reinsurance or catastrophe bonds—blunt instruments often unavailable for certain inflation risks. It's like trying to fix a leak with a sledgehammer because no one invented duct tape yet.

"There's never really been a direct hedge for something like healthcare inflation," Ashton said. "If you can hedge that exposure more precisely, you can reduce the capital you need to hold, or expand the amount of business you can underwrite." For an industry that's basically built on managing risk, the lack of granular inflation tools has been a glaring oversight.

He expects insurers and reinsurers among the earliest institutional adopters in a second phase. Other potential applications include education financing—tuition being a classic inflation risk where a tokenized hedge could offer more flexibility than existing prepaid tuition programs. Parents everywhere just felt a flicker of hope.

USDi is already operational, with Ashton targeting a seed raise of around $1.5 million in the coming months. The broader pitch, however, is about reframing how investors think about risk. "You're born with inflation risk," Ashton said. "You're not born with credit risk or equity risk." Ouch. But also: accurate. The man isn't wrong.