The capitalization of stablecoins exceeded USD 16 billion; Tether accounts for 85% of this market with a supply of more than USD 14,000 million.
There has been unprecedented growth within the cryptocurrency market thanks to the boom that stablecoins have been experiencing in recent months. The total capitalization of these US-dollar-pegged currencies between July 20th and August 31st went from about USD 12 billion to more than USD 16.5 billion, which might be a consequence of decentralized finance (DeFi) activity.
Tether (USDT) has had the biggest expansion, with special emphasis on its versions on Ethereum and Tron, according to data from CoinMetrics. Concerning USDT-ETH, its capitalization went from about USD 6 billion (in mid-July) to USD 8,740 million (in late August), that is, almost 50% more.
Regarding USDT-TRX, it jumped from USD 2,885 million to more than USD 4,000 million growth on those dates. The capitalization of the first version of Tether, on Omni, remained stable around USD 1,335 million during the period analyzed.
The momentum of stablecoins is striking as it is the first time that it has reached such high capitalization. A growth of 33% summarizes the rise when comparing the market figures in the last 40 days. It is possible to obtain a daily average of about USD 100 million that have entered this market by dividing the increase of USD 4,000 million in that period.
For the analysis, Coin Metrics also considered the stablecoin USDC, which grew from USD 1.11 billion to USD 1.522 billion, that is, by 40%. The remainder stablecoins analyzed were DAI (USD 277 million), PAX (USD 268 million), BUSD (USD 185 million), HUSD (USD 133 million), and USDK (USD 22 million).
According to the figures, Tether has 85% of the total stablecoin market, with a capitalization of USD 14,000 million between its three versions.
DeFi After Steady Stablecoin Growth
Despite its risks, DeFi has generated quick interest and loans, which has gained its popularity. Services like Compound, Synthetix, Curve, REN, Balancer, and Aave offer these applications. They operate on the Ethereum blockchain, where both profits and losses can occur.
To illustrate this, stablecoins and DeFi are a kind of “marriage” in which the latter works. In other words, the user uses stablecoins to inject capital into a platform and generate collateralization with another token.
Operators enter funds that become locked or at stake, which generates an increase in capitalization on the platform that the user uses and in stablecoins in general. By maintaining his or her positions, the user can receive returns or request loans. An example is that of Compound, which uses DAI, USDC, or Tether for these operations.
There are different opinions regarding how many millions of US dollars are locked in DeFi. Some versions claim that there are more than USD 6,000 billion, while more conservative ones place the figure at about USD 3,500 million.
In the case of stablecoins in general, coins of this type were leading the cryptocurrency market last July, according to eToro. Furthermore, the Financial Action Task Force (FATF) has already predicted that stablecoins will have massive adoption in the next few years.
By Willmen Blanco
