Stablecoins 🔍

Stablecoins are gaining significant traction in the blockchain world, with several popular options available such as USDC, DAI, and NOTE. Here's a breakdown of the current state of stablecoins:

① Stablecoins

Stablecoins have settled a record $8T in 2022 and are again moving significant amounts of value around on public blockchains in 2023. Coin Metrics recorded over $1.2T of adjusted on-chain volume in January and February, with USDC settling $528B and Tether settling $641B.

However, regulatory discussions are heating up, and since Paxos was directed to halt minting of Binance’s BUSD, the supply of BUSD has fallen $6B down to $10B. Meanwhile, USDC supply has risen about $2B and has gained a market share of 45% on ETH, its highest since 2019.

Tether’s instantiation on the low-fee Tron Network continues to see signs of increased adoption, with the total number of addresses holding USDT on Tron recently surpassing 20M. The distribution of total Tether on Tron has reached an all-time high of 55% with $39B on Tron and $30B on Ethereum.

② USDC

USDC (USD Coin) is a stablecoin created by Circle, and its supply has grown rapidly from less than 5B in January 2021 to nearly 50B in January 2022. USDC transfer volume on Ethereum has seen a remarkable rise, surging from under $25B monthly in 2020 to its all-time high of nearly $600B in November 2022. Over 50% of USDC holders hold less than 10 USDC, highlighting democratization of finance and different use cases for USDC, from store of value to means of payment.

③ DAI

Over the past 12 months, DAI supply has fallen ~46% from about 9.8B to 5.2B. A chunk of this reduction came from wstETH vaults. The majority of stability fees generated by the DAI supply have been coming from real-world asset vaults, with the PSM in second place and ETH vaults in third. DAI on L2s/bridges fell from a little less than ~2B a year ago to ~500M today.

④ NOTE

NOTE, a fully decentralized, over-collateralized, and automated stablecoin backed by M1 assets on Canto, has witnessed a 138% YTD growth in TVL. In addition, NOTE’s peak 24H volume reached 127.8M in February. Canto is a Layer-1 blockchain delivering core DeFi primitives as public utility protocols, or Free Public Infrastructure (FPI).

Stablecoins are an essential component of the crypto ecosystem, offering a hedge against volatility and a means of exchange for digital assets. As the regulatory landscape evolves and adoption continues to grow, stablecoins are likely to play an increasingly prominent role in the future of finance.