Research Summary
The report discusses the current state of stablecoins, focusing on their supply, usage, and adoption trends. It highlights the resurgence in stablecoin supply, indicating a potential revival of on-chain liquidity. The report also examines the market capitalization and supply trends of major stablecoins like Tether (USDT) and USD Coin (USDC), their adoption trends, and their role in decentralized finance (DeFi) and trading markets. It concludes by discussing emerging trends in the stablecoin market.
Key Takeaways
Stablecoin Market Capitalization and Supply Trends
- Stablecoin Market Capitalization: The report notes that the market capitalization of stablecoins peaked at $155 billion in 2022 before declining to $112 billion. The market capitalization primarily comprises USDT and USDC, with Tether’s market cap reaching an all-time high of $88 billion and USDC stabilizing at $22.5 billion.
- Stablecoin Supply Trends: The report observes a noticeable resurgence in stablecoin supply since October 2023, indicating a potential revival of on-chain liquidity. This upward trend suggests an environment where more capital is available for deployment.
Stablecoin Adoption Trends
- Stablecoin Adoption: The report highlights that Tether on the Tron network has experienced consistent growth in adoption, with nearly 40k addresses holding more than $100k. This growth can be attributed to its lower transaction fees and increasing use in emerging economies across parts of Latin America, Africa, and Asia.
Stablecoin Usage in DeFi and Trading Markets
- Stablecoin Usage in DeFi: The report notes that stablecoins play a crucial role in DeFi, serving as a form of stable collateral and enabling users to earn interest on their digital asset holdings. The utilization rates for major stablecoins on Aave have climbed to levels last seen in 2021, indicating increased demand for stablecoin collateralized loans.
- Stablecoin Usage in Trading Markets: The report observes a notable uptick in stablecoin spot trading volumes, underscoring their utility as a quote asset on both centralized and decentralized exchanges. USDT dominated trusted spot volumes, reaching $18.8 billion on November 15, 2023.
Emerging Trends in Stablecoin Markets
- Emerging Trends: The report discusses the rise in US Treasury yields amid the cycle of financial tightening as a major theme over the last two years. This has presented an opportunity cost for stablecoin holders and issuers, fueling capital rotation out of on-chain markets. The report also mentions the rise in tokenized treasuries and interest-bearing stablecoins.
Actionable Insights
- Monitor Stablecoin Supply Trends: The resurgence in stablecoin supply could indicate a potential revival of on-chain liquidity. Stakeholders should monitor these trends to understand the liquidity environment and potential capital deployment opportunities.
- Understand Stablecoin Adoption Trends: The consistent growth in Tether adoption on the Tron network, particularly in emerging economies, could indicate potential areas of focus for stablecoin projects. Stakeholders should understand these trends to identify potential growth areas.
- Assess Stablecoin Usage in DeFi and Trading Markets: The increased usage of stablecoins in DeFi and trading markets underscores their utility. Stakeholders should assess these trends to understand the demand for stablecoins and their potential applications.
- Consider Emerging Trends in Stablecoin Markets: The rise in US Treasury yields and the emergence of tokenized treasuries and interest-bearing stablecoins could impact the flows of capital. Stakeholders should consider these trends when making decisions related to stablecoin investments.
