Amidst the DeFi mania propelled by yield farming, the economic foundation of this sector, stablecoins are growing massively as well.
The total supply across the most popular stablecoins has actually reached a new peak of $20 billion, thanks to the increasing demand for these USD-pegged cryptos.
The most popular stablecoin, Tether, has surpassed $15 billion in market cap, out of which 60% is on Ethereum blockchain. USDT is also the second-biggest gas guzzler after DEX Uniswap.
In the last 30 days, $10.5 million worth of gas has been spent by Tether on Ethereum Network, as per Eth Gas Station.
However, it’s not just Tether, but other stablecoins are also gaining traction extensively. In the month of September, the market cap of BUSD, Binance’s stablecoin, has surged from $190 million to $325 million, as per data source Skew.
In less than a fortnight, Circle and Coinbase’s USDC added $500 million, currently standing at a $2 billion market cap.
2 Billion issued on USDC.
money is entering crypto and DeFi at record pace pic.twitter.com/H4PmTX51CY
— CL (@CL207) September 13, 2020
Besides the $8.5 billion DeFi market driving the demand for stablecoins, these USD pegged digital currencies are also a popular on and off-ramp method for crypto in Asia. People are also using them to move their capital out of the countries.
Fiat currency debasement, thanks to monetary policies, currency controls, and economic and political crises, are what’s behind this growth.
Tether is an asset digitisation/transport layer. We dispute its centralisation, but its success tells us how powerful the idea is to digitise traditional assets onto DLT networks. Solving this in a trustless way will unlock internet native finance. All assets will be digitised. https://t.co/qAFkNnLy2J
— Willy Woo (@woonomic) September 13, 2020
Interestingly, Tether not only manages double the bitcoin’s daily volume, but it also processes more transactions than the leading digital asset. Between January and August, at least $40 billion worth of average transactions were processed in Tether.
This has naturally brought regulatory scrutiny to these coins, with FATF and governments calling for their regulation. Meanwhile, central banks are also working on their own digital currencies to maintain their control of monetary sovereignty.