Supply of Stablecoins on Ethereum Chain Drops by Over 30%
The supply of stablecoins on the Ethereum chain has experienced a significant decrease, dropping by more than 30% from $100 billion to $66 billion since 2022. This decline is mainly attributed to the drop in supply of BUSD and USDC, causing the overall market value to fall from $139 billion to $129.5 billion.
Tron Stablecoin Supply Rises by 57%
On the other hand, the supply of stablecoins on the Tron network has witnessed a notable increase, rising by over 57% from $31 billion in 2022 to $48.9 billion. This highlights the growing popularity and adoption of stablecoins on the Tron blockchain.
Total Market Value of Stablecoins Decreases
According to a study conducted by Six Degree, the total market value of stablecoins stands at $129.5 billion as of December 16, 2023. This represents a 31% decrease from the peak value of $188 billion seen earlier in the year. In December 2022, the market value of stablecoins was $139 billion.
The decline in market value can be attributed to the decrease in supply of BUSD and USDC. However, USDT, the top stablecoin, experienced a 23% increase in supply.
Stablecoin Ownership Breakdown
The study also analyzed stablecoin ownership by holders. It revealed that externally owned accounts (EOAs) accounted for around 50% of stablecoin ownership. Centralized exchanges owned 30% of the stablecoins, while decentralized finance (defi) platforms held less than 6%.
Impact on Defi and Ethereum
The influx of stablecoins on the Ethereum blockchain played a crucial role in driving the previous bull market, especially during the defi summer period. However, the supply of stablecoins in defi protocols on Ethereum has been moving in the opposite direction compared to the overall market trend since 2023.
A report suggests that the growth of Ethereum Layer2 solutions has provided a favorable environment for the development of defi and innovative protocols. The study also found that 60% of stablecoins held by top addresses are dormant or inactive. Furthermore, new addresses primarily made their first stablecoin transfer within the previous 30 days.
Hot Take: Decrease in Stablecoin Supply on Ethereum Chain Raises Concerns
The significant decrease in the supply of stablecoins on the Ethereum chain raises concerns about the overall stability and growth of the cryptocurrency market. This decline can potentially have an impact on defi platforms and their ability to attract liquidity.
Additionally, the rise in stablecoin supply on the Tron network highlights the competition between Ethereum and Tron in the stablecoin market. Tron’s growth in this area suggests that it is gaining traction as a viable alternative to Ethereum for stablecoin transactions.
Overall, the fluctuation in stablecoin supply demonstrates the dynamic nature of the cryptocurrency market and the need for investors to carefully evaluate and analyze market trends.
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