Figure 7: Comparison of Existing Digital Wallet Services
Incremental improvements could be leveraged when targeting user groups who have specific preferences. For example, improved anonymity could be marketed to those demanding privacy in purchases. Loyalty points or rewards could be easily implemented when a P2B payment is made. In Europe, there is a significant need for borderless transaction solutions given the variety of currencies in close proximity. Frequent travelers may find the borderless qualities of stablecoins attractive.
Factors leading to success of adoption.
For mainstream adoption to occur, a stablecoin firm must either develop its native wallet or develop strong partnerships with existing wallets. The market for digital wallets is highly competitive. In the US, Venmo, Cash App, and Zelle dominate. In China, AliPay (520 million users) and WeChat Pay (800 million users) have reached mass adoption. In Europe, currency borders have hindered development. However, blockchain startup Circle (backed by Goldman Sachs) is gaining attention. Also, large companies like Apple, Google, and Facebook are now offering digital wallet solutions (Apple Pay, Google Pay, Facebook Messenger Payments).
Given the intense competition and demand for value-added digital wallets, introducing a new currency is not enough to drive adoption. In order to drive adoption, important factors are network effects and the leveraging of competitive advantages.
3.4. Use Case 4: Stablecoin Smart Contract Integration: Solving lockup volatility and widening the user base.
Smart contracts are an innovative way to decentralize and create efficiency gains for common everyday transactions. The benefits of using smart contracts are wide-ranging (for more in-depth information on the use cases of smart contracts, see here). Smart contract adoption is still in its early stages because smart contracts are mostly only compatible with highly volatile cryptocurrencies. This creates two limitations: smart contract users are mostly people who are risk-tolerant and comfortable with cryptocurrencies and smart contracts require capital lock up, which creates risk when capital is highly volatile and subject to wild fluctuations.  
Stablecoins can expand smart contract use beyond that of the early adopter audience and into that of a mainstream audience. This is because a crypto asset pegged to a familiar unit of account (e.g. USD) is more palatable to users who may be wary of cryptocurrencies. Because stablecoins are both price stable and have the ability to interact with smart contracts, they overcome the significant challenge of volatility risk associated with using smart contracts. To better illustrate how stablecoins enable the smart contract space, imagine the dynamic of a tenant and landlord.
Imagine Jill is leasing a house to Jack. Traditionally, Jill would bill Jack on a monthly basis for the right to live in the house. In this example, a smart contract could be used to replace the lease by maintaining the legal documents allowing Jack to live in the house if—and only if—he pays. Furthermore, the smart contract could execute agreements in the lease, such as utility bills and maintenance. While smart contracts could greatly improve the current process, the problem is that they are only compatible with cryptocurrencies. Since proprietary tokens and major cryptocurrencies are very volatile in price,it’s unlikely that Jill would agree to a lease denominated in these assets given her potential losses associated with the volatility.
On the flip side, stablecoins offer a way to avoid this volatility while also being smart contract compatible. If the leasing smart contract was programmed to accept a stablecoin, Jill could be certain that the value of the payment would not depreciate before exchanging the token for fiat. The applications go way beyond leasing services— banks can use smart contracts for mortgage payments, companies can use smart contracts to pay employees, prediction markets can be created, and much more.
Factors driving growth and success for stablecoins in smart contracts.  
The following factors are driving the growth of stablecoin adoption within the context of a smart contracts use case.
3.5. Use Case 5: Stablecoins as Reserve Currency
The current status of central bank reserves.
Governments and banks around the world hold reserve currencies which are low in volatility and highly liquid in order to reduce risk in their wealth. This is very similar to the hedge against volatility known as safe havens. In 1971, much of the world held USD as their reserve currency, since it was pegged directly to gold until Richard Nixon ended this system. Today, the USD is still the de facto reserve currency for most of the world, which currently stands at 57% of the world’s reserve composition, according to the IMF (figure 8).
This fact causes many benefits to accrue to the US. As a result, other nations may seek to reduce dependence on USD and increase the international use of their own currency. For example, China recently released oil futures which are denominated in RMB. Furthermore, China’s Belt and Road Initiative, a one to eight trillion dollar infrastructure plan, is meant to facilitate international trade denominated in RMB.
This system also grants the U.S. the ability to exercise control over the global trade system. For example, the US recently made a unilateral decision to impose sanctions on Iran by coercing the dominant international settlement system (SWIFT) to exclude Iran. This has caused many American allies to realize the need for a change in the status quo. The German Foreign Minister, Heiko Maas, proposed a payment channel independent of the U.S. in order to protect European companies from legal sanctions.
Furthermore, the International Monetary Fund (IMF) has clearly stated their goal of reducing sovereign currencies as reserves (figure 9). In 2010, the Strategy, Policy, and Review Department of the IMF published a document entitled “Reserve Accumulation and International Monetary Stability”, which outlines the risks associated with one nation having outsized control over reserves, saying that members of the fund should have the objective of “...making the Special Drawing Right (SDR) the principal reserve asset in the IMS [International Monetary System].”