Analysis: Interest payments on stablecoins should be prohibited, as it would undermine efficiency and stability.

According to Golden Finance, Hans Gersbach and other scholars from the KOF Economic Institute of ETH Zurich stated during their speech titled “Infectious Stablecoins?” at the World Economists Conference (ESWC), which opened on the 18th: “In an environment where multiple issuers are competing, if one issuer starts paying interest, then other issuers cannot afford not to follow suit. This will lead to overall inefficiency and instability in the stablecoin system.” They added, “The interest payment mechanism of this stablecoin is contagious and may ultimately lead to a series of problems. Therefore, banning interest payments through regulation is a core measure to maintain an efficient stablecoin market.” Scholars have also pointed out that in the so-called “stablecoin secondary market”, if investors do not redeem directly from the issuer but circulate through market trading, a failure in adjustment could also trigger panic, thus requiring regulation as well.