Opinion: Will the Rise of DeFi Make Stablecoins Overtake BTC?
Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from
Crypto Valley Live (ID: cryptovalley)
Crypto Valley Live (ID: cryptovalley)
Major cryptocurrencies such as Bitcoin retain their dominance, but stablecoins also appear to be going from strength to strength. And their transaction volume on mainstream blockchains is also increasing.
There are thousands of cryptocurrencies in existence, but some are undoubtedly more popular than others. Bitcoin, for example, is the most sought after cryptocurrency in the world and has maintained this dominance for many years.
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Over Bitcoin?
According to Watkins, Bitcoin is facing some serious competition from the hugely popular stablecoin Tether (USDT). USDT has surpassed Bitcoin to become the top cryptocurrency on the public chain. This conclusion is based on the DeFi boom and the latest data from the second quarter of 2020.
Stablecoin Market Value丨Source: Messari
Another tweet implied that this increase is not only for USDT, but also for the entire stablecoin ecosystem. In the first quarter of 2020, the stablecoin monetary base grew to $2.4 billion, Watkins said. That puts the total value at about $8 billion.
There was also a huge jump of $3.8 billion in the second quarter of 2020. As of now, the total value is about 12 billion US dollars.
Annual transaction volume of stablecoins丨Source: Twitter
The growth of stablecoins is especially noticeable if only the usage on the public chain is considered. For example, in the second quarter of 2020, about $144 billion in stablecoin transactions were settled on public chains.
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Blockchain and Stablecoins
In 2020 so far, the trading volume of stablecoins is about 508 billion US dollars. Fiat alternatives are even catching up to some industry heavyweights. In recent months, stablecoin trading volume has often accounted for more than 40% of the total daily settlement volume of Bitcoin and Ethereum.
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The current situation is significant given the status of these high-profile cryptocurrencies. If stablecoins continue to compete with them at this level, it could mean a major change in the industry. However, there is still some disagreement on which public chains these transactions are carried out on.
Among them, Ethereum is the most popular. Data from Messari shows that Ethereum accounts for 65% of all stablecoin usage. Additionally, it accounts for more than 85% of stablecoin transaction volume.
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Rise of Ethereum
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Ethereum accounts for over 65% of all stablecoin issuance | Source: Twitter
There are many factors driving the demand for stablecoins, one of which is DeFi. The issuance of new stablecoins is clearly driven by the yield mining craze. This also caused the Dai peg to rise to $1.02 following Compound’s June 30 patch.
Both Dai and USDC (USDC) issuance saw growth around this time. USDC issuance rose from $355 million to $1.1 billion, of which $250 million USDC went into Compound. Dai circulation rose to $72 million, and over $78 million worth of Dai entered Compound.
Plus, despite recent hacks of DeFi platforms, and uncertainty over the latest version of Ethereum, progress continues. In fact, Ethereum daily active addresses continue to grow and recently hit a two-year high.
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