Tether (USDT) leads among the tokens with USD 10.01 billion worth of market capitalization. ETH has a market capitalization of around USD 27,000 million.
The total market capitalization of all Ethereum ERC-20 tokens exceeds that of Ether (ETH), the network’s primary cryptocurrency, according to data from Etherscan.
The total market capitalization of the 970 ERC-20 standard tokens is USD 33 billion, while that of ETH is around USD 27 billion. This means that ERC-20 tokens are 22% above the market capitalization of the network’s native cryptocurrency.
It seems unfair to compare the capitalization of 970 tokens with that of a single cryptocurrency. However, this could be a way to analyze the growth of the tokens. Of course, the more tokens there are in the Ethereum network, the more companies and use cases for ETH.
However, several tokens considered for such capitalization are on more than one blockchain or are no longer on Ethereum. Part of the value safeguarded in some tokens might not be on the Ethereum network, so the tokens could represent around 20% of Ethereum’s capitalization.
For example, of the USD 10 billion taken as Tether’s market capitalization, only USD 6 billion is from tokens on the Ethereum network. On the Tron network, Tether’s capitalization is USD 2.8 billion, and on the Omni network, a Bitcoin-related network, it is USD 1.3 billion. Tether also trades on networks like EOS, Liquid, Algorand and SLP, so it stands to reason that its value is distributed on multiple networks.
Binance Coin (BNB) bases on Ethereum’s ERC-20 standard, but is on the Binance Chain, so some of the tokens may not be on Ethereum. Aeternity and Tron also released their tokens on the Ethereum network but then migrated their ERC-20 tokens to their own blockchain networks.
Stablecoin and DeFi ERC-20 Tokens Impact Ethereum
Market capitalization results from multiplying the price of an asset by the number of units available on the market. The capitalization of a stablecoin will increase along with the number of units, while that of a DeFi token increases with the price. Taking this into account, it is striking that there are around USD 2.18 billion locked on Decentralized Finance (DeFi) platforms.
The use of ERC-20 tokens on DeFi platforms could drive an increase in the value safeguarded on the Ethereum network. DeFi-related ERC-20 tokens like 0x (ZRX), Kyber Network (KNC) and Maker (MRK) have an increasing number of active addresses, according to data from Coin Metrics. ZRX has a market capitalization of USD 370 million, KNC has one of USD 330 million, and MRK has one of about USD 440 million.
Despite the increasing importance of ERC-20 tokens on Ethereum, ETH remains the main reserve asset for the Ethereum financial system. Even though DeFi and other Ethereum-based platforms have their own tokens, most of them allow using ETH to pay transaction fees.
However, the accelerated growth of the DeFi ecosystem is another factor that has increasingly caught the attention of the Ethereum community. The growth of DeFi creates concern that it is an indication of the emergence of a new economic bubble on Ethereum.
By Alexander Salazar