Since 2024, the U.S. dollar index has entered a new round of systematic decline, with a cumulative annual drop of over 9% at one point, making it one of the weakest performance ranges in nearly a decade. Whether attributed to high fiscal deficits, expectations of debt monetization, manufacturing repatriation strategies, or the trend of multipolarization in the global monetary system, this round of weak dollar cycle has evolved from short-term fluctuations to a medium-term structural adjustment.

Under the traditional dollar governance framework, the United States relies on two core tools to stabilize the global capital system: first, interest rates, attracting capital repatriation by increasing the nominal return on dollar assets; and second, Treasury bonds, carrying international reserves and institutional allocation demands through the world’s deepest safe asset pool.

But today, this mechanism is simultaneously touching the boundaries of constraints: high interest rates are rapidly pushing up the fiscal interest burden, while the expansion of Treasury bonds itself is weakening market confidence in long-term fiscal sustainability. In this context, dollar governance tools are undergoing generational changes.

Wall Street is gradually forming a consensus: relying solely on price tools is no longer sufficient to support the global financial system in an era of high debt, and the United States must upgrade the “infrastructure for distributing dollar assets” by retaining capital through institutional innovation rather than simply through returns.

The convergence of stablecoins and RWA is an institutional solution emerging under this macro constraint. They are not simply fintech innovations, but a set of financial infrastructure projects attempting to reconstruct the global capital flow path: stablecoins provide an on-chain U.S. dollar cash layer, RWA provides an on-chain configurable asset layer, and the combination of the two forms a cyclically expanding “U.S. dollar asset closed loop” that more smoothly absorbs global capital into the U.S. dollar financial system.

01 Under the weak dollar cycle, dollar governance tools are undergoing generational changes

In the past two decades, the core logic of dollar governance can be summarized as: adjusting global capital flows through interest rate adjustments. Raising interest rates increases the return on dollar assets, attracting capital repatriation; cutting interest rates releases liquidity, supporting global growth. This system, centered on price tools, worked well in an era of low debt and low interest rates.

But entering the post-pandemic era, the U.S. fiscal structure has undergone fundamental changes. The federal debt has exceeded $36 trillion, the fiscal deficit remains high for a long time, and interest expenses have begun to rigidly squeeze the budget. Interest rates are no longer just a monetary policy tool, but a heavy fiscal burden. Every interest rate hike will quickly translate into higher fiscal interest costs; and the market has also begun to reassess the feasibility of “whether high interest rates can be maintained for a long time.”

At the same time, the global capital allocation environment is being reshaped. Geopolitics is restructuring supply chains, regional financial systems are accelerating differentiation, and non-U.S. economies are promoting local currency settlement and financial autonomy, weakening the psychological anchor of the U.S. dollar in the global system.

This means that dollar governance is entering an “infrastructure-driven era” from a “price-driven era.” What the United States needs is not just higher yields, but a global capital adsorption system with lower friction, higher efficiency, and greater path dependence—an institutional arrangement that makes it “easier to get in and more troublesome to get out.” Stablecoins and RWA are the key tools debuting at this transition node.

02 Stablecoins are not cryptocurrencies, but the on-chain cash layer of the U.S. dollar

In the public context, stablecoins are often understood as tools for serving crypto transactions, but from the perspective of financial infrastructure, their essence is a new form of U.S. dollar cash layer. It is not a currency issued by the Federal Reserve, but it assumes functions highly similar to cash in on-chain transactions, cross-platform clearing, collateral settlement, and global transfers: real-time arrival, programmable, 7×24 hour operation, and cross-border circulation.

Traditional U.S. dollar global circulation relies on a multi-layered intermediary network of commercial banks, clearing houses, agent banks, and the SWIFT system. The system is stable but the operating costs are high, the timeliness is slow, and the cross-time zone friction is huge. Stablecoins are equivalent to building a parallel clearing network for the U.S. dollar, enabling the U.S. dollar to have truly global real-time circulation capabilities for the first time.

More importantly, stablecoins are forming a de facto unipolar pattern. Currently, on-chain settlement, lending, market making, and derivatives clearing are almost entirely denominated in U.S. dollar stablecoins. Non-U.S. dollar stablecoins are difficult to form substantial competition in terms of scale, liquidity, or application scenarios, allowing the U.S. dollar to regain its “default currency” status in the on-chain world.

03 RWA is not “buying U.S. Treasury bonds on-chain”, but the U.S.’s global financing engine

If stablecoins solve the problem of “how money flows efficiently,” then RWA solves the problem of “where money is invested.” The current market’s understanding of RWA often stays at the level of Tokenized Treasury bonds and money market funds, treating it as an on-chain cash management tool. This is the first stage of RWA that is easiest to implement, but it is not enough to reflect its strategic value.

The real increment of RWA comes from the global distribution capabilities of risk premium assets. Stocks, corporate bonds, private credit, accounts receivable, fund shares, and other assets constitute the core part of the U.S. corporate financing system. However, under the traditional financial framework, these assets are highly dependent on local financial institutions for issuance and distribution. Cross-border participation has high thresholds, complex processes, and long settlement cycles, and the participation of global capital has not been fully released.

The goal of RWA is not simply to “move assets on-chain,” but to reconstruct the distribution path: by standardizing the on-chain certificate structure, the asset pool that was originally only open to a few institutions is split more finely, sold further, and settled faster, thereby directly introducing global capital into the balance sheets of U.S. companies.

04 Stablecoin + RWA closed loop is essentially a global liquidity pumping station

When stablecoins complete the laying of the “on-chain U.S. dollar cash layer” and RWA builds the supply of the “on-chain asset layer,” the combination of the two is not a simple superposition of two financial innovations, but a global capital circulation system with self-reinforcing capabilities.

From the perspective of the capital path, this closed loop can be broken down into four continuous links: The first step is for fiat currency to enter the stablecoin system. Once bank deposits, corporate funds, or institutional proprietary capital are converted into stablecoins, the U.S. dollars in the traditional system are converted into “digital cash” that can be transferred in real time on the chain.

The second step is for stablecoins to enter the RWA asset layer to complete allocation. Funds are no longer just serving transactions, but entering Tokenized Treasury bonds, money market funds, corporate bonds, private credit, accounts receivable, or fund shares, forming an asset portfolio that can be interest-bearing, transferable, and mortgageable.

The third step is for RWA to enter the mortgage and refinancing system. These on-chain assets can be used as standardized collateral to participate in lending, repurchase, and liquidity management, releasing new stablecoin liquidity and forming capital recirculation.

The fourth step is to form intra-system reallocation rather than frequent exits. Under the constraints of compliance review, bank channels, and cross-border costs, funds are more inclined to complete position adjustments within the on-chain system rather than immediately returning to the fiat currency system.

When these four steps form a closed loop, a self-reinforcing capital pumping station begins to operate: the entry threshold continues to decrease, the allocation tools continue to be enriched, the capital turnover efficiency continues to increase, and the exit path naturally forms friction buffers. The core value of this structure is not to create excess returns, but to reshape the behavior path of global capital—transforming the original one-time, linear cross-border investment into a sustainable rolling U.S. dollar asset allocation process.

05 Stickiness effect: The U.S. dollar is building a structural lock-in on the chain

In a weak dollar cycle, what really determines the stability of the U.S. dollar financial system is not “whether the U.S. dollar depreciates,” but “whether capital concentrates on escaping.” The strategic value of the stablecoin and RWA closed loop is to build a structural capital stickiness mechanism under weak dollar expectations.

This stickiness does not come from mandatory lock-in, but from the superposition of three institutional constraints. The first constraint comes from the lack of alternatives. In the on-chain financial system, U.S. dollar stablecoins form a de facto unipolar cash layer. Whether it is payment, lending, market making, or clearing, almost all are denominated in U.S. dollar stablecoins, and non-U.S. dollar stablecoins are difficult to undertake large-scale capital migration.

The second constraint comes from channel friction. Stablecoins must go through exchanges, banks, and multiple compliance reviews to return to the fiat currency world. The lower bridge channel is narrow, costly, and uncertain, making funds more inclined to rotate within the system rather than withdraw at the first time.

The third constraint comes from the ecological pricing advantage. When on-chain financial activities are highly dollarized, holding non-U.S. dollar assets not only bears exchange rate risks, but also bears the opportunity cost of inconvenience of use, and the U.S. dollar becomes the default interface.

The result of the triple structure superposition is that under weak dollar expectations, the typical reaction of capital is no longer “leaving the market,” but “rotation.” Funds move from the idle state of stablecoins to short-term RWA to obtain steady returns, while allocating digital native assets such as Bitcoin and Ethereum to hedge against sovereign credit risks. Assets with seemingly different risk preferences coexist in the same U.S. dollar settlement system. The pressure to leave the market is transformed into internal reallocation, the momentum of selling is dispersed, and the risk of systemic stampede is significantly reduced.

Conclusion: The U.S. dollar’s financial hegemony is entering the infrastructure era

The U.S. dollar’s financial hegemony has never been just a victory of monetary credit, but a whole set of global financial infrastructure networks built around the U.S. dollar: the clearing system, capital market, market making system, legal system, and asset distribution capabilities together constitute a highly self-consistent and difficult-to-replace financial operating system.

Today, in the context of the coexistence of a weak dollar cycle and high debt constraints, the United States can no longer rely on the single price tool of “high interest rates” to stabilize global capital for a long time. A more forward-looking path is to upgrade the U.S. dollar’s asset distribution and clearing infrastructure, making the U.S. dollar no longer just a currency, but the default interface for global financial activities.

Stablecoins provide an on-chain cash layer, allowing the U.S. dollar to have 7×24 hour global circulation capabilities; RWA provides an on-chain asset layer, embedding U.S. corporate assets into the global capital allocation network; the combination of the two forms a closed loop, making it easier for global capital to enter the U.S. dollar system and more inclined to circulate and allocate within the system, rather than frequently leaving the market.

From a macro perspective, this is a migration of the U.S. dollar governance paradigm: from “interest rate driven” to “infrastructure driven,” from “retaining people with returns” to “path locking,” from “Treasury bonds carrying capital” to “global asset distribution adsorbing capital.” The stablecoin and RWA closed loop is providing a 2.0 version of the institutional foundation for the U.S. dollar’s financial hegemony.

It may not prevent the cyclical adjustment of the U.S. dollar, but it is very likely to determine who will still stand at the center of the system in the next round of global financial restructuring, and who can only passively adapt to the rules.

[RWATech]