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AI agents may become the next liquidity engine for stablecoins
The stablecoin market has surged past the $300 billion mark as clearer regulation in the United States and broader institutional interest accelerate adoption. Yet issuer fragmentation and jurisdictional variety create real challenges for liquidity and user experience. Paxos Labs co-founder Bhau Kotecha argues that a new class of autonomous AI agents could transform fragmentation from a liability into a competitive advantage by routing liquidity to the most efficient stablecoin issuers in real time.
Fragmentation, competition and liquidity silos
Today’s stablecoin landscape includes dollar-backed heavyweights such as Tether and Circle, newer consumer-focused entrants like PayPal’s PYUSD, and synthetic alternatives such as Athena. As more issuers launch stablecoins aligned with different business models, the market risks splintering into liquidity silos. That fragmentation can confuse users and slow mainstream payments and DeFi integration unless interoperability and price discovery improve.
Kotecha describes fragmentation as a “double-edged sword.” Competing issuance models can spur innovation, but without efficient routing and transparent economics, they also create friction that could hinder adoption. His thesis: AI-powered agents will react instantly to market signals and optimize where liquidity sits, nudging the ecosystem toward stronger price efficiency and lower overall costs.
How AI agents would route liquidity
AI agents are autonomous software programs that can make decisions on behalf of users — from shopping assistants to portfolio managers. Kotecha expects these agents to evaluate fees, settlement speeds, counterparty risk and on-chain liquidity, then automatically select the stablecoin that delivers the best outcome for a given transaction. That behavior could trigger a market-level optimization where liquidity aggregates around the most efficient issuers, forcing competition on fundamentals like reserve quality and settlement reliability.
In practical terms, this could compress transaction fees and create tighter spreads for transfers and payments. With intelligent routing, users would not need to manually compare issuers or move funds between tokens to get the best economics — their agents would do it for them.
The growing chorus behind agent-driven adoption
Kotecha is far from alone in highlighting AI agents as a catalyst for stablecoin growth. Galaxy Digital CEO Mike Novogratz predicted that autonomous agents will emerge as primary stablecoin users, driving transaction volume as they handle routine purchases and microtransactions. Novogratz imagines agents that understand a user’s preferences, budget and dietary needs, then execute purchases instantly using stablecoins rather than slower bank transfers.
Cloudflare has already signaled interest in this future. The company announced work on NET dollar, a stablecoin designed to support instant, programmatic payments by AI agents — enabling an assistant to buy a flight or snap up an item the moment it goes on sale.
Separately, developers at Coinbase pointed to legacy web standards — notably HTTP 402 “Payment Required” — as undeveloped plumbing that could help agents become high-volume users on chains such as Ethereum. And thought leaders like Anoma co-founder Adrian Brink say intent-based blockchain primitives will be necessary to ensure agents act in ways that preserve user control over data and assets.
Implications and remaining challenges
Agent-led liquidity routing could make fragmented issuance a net positive for the crypto ecosystem, pushing issuers to improve capital efficiency and settlement reliability. However, material challenges remain. Standards for agent identity, intent, and authorization must be designed to protect users from rug pulls, governance attacks, and privacy leaks. Regulatory clarity will also play a central role: issuers that can demonstrate robust reserve practices and compliance will be better positioned to attract algorithmic liquidity from agent networks.
For crypto markets, the combination of smarter routing and better-regulated, transparent stablecoins could unlock broader consumer payments, higher-frequency programmatic commerce, and new DeFi primitives that rely on rapid, low-cost settlement. As AI agents evolve, they may redefine not only who uses stablecoins but how liquidity flows across the entire digital-asset ecosystem.
Source: cointelegraph
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