Hey there!

Welcome to the tenth edition of Onchain Lense. Today, we are exploring how stablecoins remain the most popular tokenised asset onchain, the networks they are issued on, and the growth of their monthly active addresses.

Tokenisation is the process of bringing tangible assets from the physical world onto a blockchain network and is thus called real-world asset tokenisation. They usually include the issuance of capital market products onchain, where digital securities are tokenised and offered to retail customers. Examples include commodities, real estate, art, etc., but most importantly, stablecoins, as they are the earliest form of RWAs. Creating a tokenised version of fiat currencies mimics the stable medium of exchange units in the volatile market environment.

Companies like Tether started issuing these assets in 2014. They are backed by real-world collateral, such as bank deposits, short-term notes, and even physical gold. Today, the total market cap of the category is close to $161 billion. Its all-time high value was close to $172 billion during the last bull market cycle in April 2022. It fell to as much as $126 billion towards the end of last year and has been picking up ever since.

Tether continues to lead the market with 70% dominance as of writing. The first USDT tokens were issued on the Bitcoin blockchain and later diversified on Ethereum, Tron, and others. Tron hosts the highest USDT supply. The second biggest asset is USDC by Circle, which was launched in 2018 on the Ethereum blockchain and has a market dominance of 18%. Over the years, many more USD-pegged stablecoins have emerged, natively issued across various networks and are backed by collateral beyond traditional bank deposits and real-world securities.

Ethereum hosts the largest decentralised finance (DeFi) ecosystem, making it the preferred network for issuing these assets. Out of the total $161 billion market cap, $87.5 billion (54%) is on Ethereum, followed by Tron at $60.6 billion (37%). Binance Smart Chain and Solana are other well-known networks on which stablecoins are issued.

The total number of stablecoin holders exceeds 100 million. The monthly active addresses number hit an all-time high of 20 million in March and May 2024. These numbers are supported by the thriving DeFi ecosystem on different blockchain networks, as these assets provide stable value that reduces volatility, enables interoperability and cross-chain transfers, and improves the liquidity of your funds.

Aside from USD-pegged stablecoins, other currency-pegged tokens have yet to see meaningful adoption. Despite this, some leading financial institutions like Societe Generale, DWS, and Galaxy Digital are launching Euro-pegged stablecoins, anticipating their growth in 2024. Beyond this, most tokenisation efforts are being put into US Treasury Bills and private credit protocols. So, the earliest and simplest form of RWA, fiat-backed stablecoins, is by far the most popular. Their importance cannot be overstated, as they allow users to retain their funds on the blockchain even when not trading.

Thanks for reading Onchain Lense by Asva Capital! Subscribe for free to receive more data-backed insights.