The Value of Stablecoins on Ethereum Declines while Tron Records Growth
The value of stablecoins on Ethereum has experienced a decline of 34% since 2022, while stablecoins on TRON have seen a significant growth rate of 57.7% during the same period, according to a recent report from Sixdegree Lab.
Stablecoin Supply Trends
The supply of stablecoins on Ethereum has been steadily decreasing, dropping from its peak of $100 billion to $66 billion, marking a 34% decline. In contrast, stablecoin supply on Tron has followed an upward trajectory, growing from $31 billion in 2022 to $48.9 billion, an increase of 57.7%.
Overall Value of Stablecoins
Despite the recent bull market, the overall value of stablecoins has not seen a significant increase. Currently, the total market value of stablecoins stands at $129.5 billion, which represents a decline of 31% compared to its peak value of $188 billion.
Among the stablecoins, Tether (USDT) holds the largest market share at 56.3%, followed by USD Coin (USDC) at 30.5%, and DAI at 5.07%. These three stablecoins have a combined value of $40.03 billion, $21.7 billion, and $3.6 billion, respectively.
Major Stablecoin Holders
Externally owned accounts (EOAs) hold approximately 50% of stablecoins, while centralized exchanges (CEXes) account for around 30%. DeFi protocols only hold approximately 5.5% of stablecoins, a significant decrease from its peak of around 25% in January 2022.
The decrease in stablecoin supply within DeFi protocols on Ethereum may be attributed to the emergence of Ethereum Layer2 solutions, which have provided a more favorable environment for the development of DeFi and innovative protocols.
Addressing the holders of stablecoins on Ethereum, the majority (94.2%) hold less than $1,000 worth of stablecoins, contributing only 9.28% to the overall stablecoin holdings. In contrast, addresses holding over 100,000 stablecoins represent around 0.562% of addresses but contribute a substantial 87.6% to the total stablecoin holdings.
Interestingly, approximately 60% of the stablecoins held by these top addresses remain dormant. These addresses are either considered reserve addresses or inactive addresses that have not engaged in any stablecoin transactions within the past 180 days.
Positive Supply Growth for Stablecoins
In November, the 90-day net change in the supply of the top four stablecoins turned noticeably positive, marking the first such instance since mid-May 2022. Stablecoins have been widely used to fund cryptocurrency purchases since 2020.
An increase in their supply is seen as a potential buying pressure or a reserve of funds that investors can deploy to purchase cryptocurrencies or use as margin in derivatives trading. Stablecoins remain key to the day-to-day operations of the cryptocurrency industry, acting as a bridge between traditional finance and cryptocurrencies.
“Stablecoins have become the foundation of the cryptocurrency market,” William Quigley, one of the co-founders of Tether, told Cryptonews. “Stablecoins are the core ingredient in virtually all DeFi applications. Without stablecoins, overall trading volume and liquidity in the crypto market would likely drop 75%.”
Hot Take: Stablecoin Trends Reflect Market Dynamics
The decline in the value of stablecoins on Ethereum and the growth of stablecoins on Tron showcase the dynamic nature of the cryptocurrency market. While Ethereum has seen a decrease in stablecoin supply within its DeFi protocols, Tron has experienced a significant increase in stablecoin supply.
Stablecoins play a crucial role in the cryptocurrency industry, acting as a bridge between traditional finance and digital assets. Their supply trends and distribution among holders provide insights into the market’s overall liquidity and trading volume. As cryptocurrencies continue to evolve, stablecoins will remain an integral part of the ecosystem, supporting various applications such as decentralized finance.
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