The Volume of Stablecoins Increased in 2020
TechnologyBit News Today1 min read
According to data from Coin Metrics, total stablecoin supply ended the third quarter at $19.87 billion, while market capitalizations for the three leading stablecoins—USDT, USDC, and PAX—surged 161%, 191%, and 146%, respectively, over the 12 months ending April 29, 2020. An expert noted that substantial stablecoin issuance occurred during early March's initial crypto market downturn as investors seemingly looked to store value in traditional fiat assets like the U.S. dollar.
During March, the three largest stablecoins each recorded month-on-month on-chain expansion of at least 50%, with steep growth carrying into April. On April 29, USDT's market cap reached $7.52 billion, whereas fourth-place BUSD stood at $194 million, behind USDC at $726 million and PAX at $244 million.
This growth surge has driven total stablecoin market cap to over $13.4 billion. USDC stands as the primary stablecoin competitor to Tether, growing 191% to $726 million market cap in this 12-month period. USDT expanded to account for $11 billion of the stablecoin sector's capitalization, more than doubling from $5 billion since March and briefly overtaking Ripple's XRP as the third-largest cryptocurrency.
Expanding stablecoin demand has also been linked to growing enthusiasm for decentralized finance. Stablecoins serve as vital infrastructure for the cryptocurrency market and decentralized finance in particular.
A deeper examination shows that most Tether transaction traffic is settled on the Ethereum blockchain, up dramatically from just under 19% settled there in April 2019. This Ethereum-centric traffic is further concentrated: 65% of all Tether value is sent in transactions over $100,000. Together, Huobi and OKEX alone source almost 50% of March Tether activity, with Binance contributing nearly 30% of the Tether present on Ethereum. Watkins observed that the massive rise in stablecoin activity and settled value stems from interexchange settlements rather than user remittances or transfers.
Serving as hedging mechanisms, media of exchange, and units of account, stablecoins have broadly facilitated the surge in decentralized finance.
