Analysis of USDT and USDC usage patterns

The current total supply of stablecoins is close to 110 billion U.S. dollars, almost four times the supply in early 2021. But this growth is not evenly distributed among the various stablecoins. In the uncertain crypto market, the stablecoin market is also changing. 

The supply of USDC has grown from approximately US$4 billion at the beginning of 2021 to more than US$26 billion. After the cryptocurrency crash in May, the growth of USDC began to accelerate-since May 11, the total supply of USDC has increased by approximately 75%. Tether (USDT) is still the dominant player in the stablecoin market, with a total supply of more than 64 billion U.S. dollars, but the growth of USDT has flattened since May. USDC is the second largest stablecoin after Tether, and its share of the total stablecoin supply is growing. 

e772401a1aad3730d6e850b079d8b25aSource: Coin Metrics Network data chart

With the stagnant growth of Tether’s total supply, its free float supply decreased in the last month. “Free circulation” supply is an indicator developed by Coin Metrics and does not include supply that is considered illiquid. The decrease in the free circulating supply of Tether represents the supply that has been redeemed and returned to the Tether reserve. This reduction in free circulation is particularly obvious on Ethereum-in the past 30 days, the free circulation supply of Tether (USDT_ETH) issued on Ethereum has decreased by about 1 billion, while the total supply has remained the same.

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Source: Coin Metrics Network data chart

The daily usage pattern of USDT_ETH has also changed recently. Historically, most Tether activities occurred mainly during working hours in Asia. The heat map below shows the most commonly used time for Tether issued on Ethereum (USDT_ETH). The darker red corresponds to the time of day (UTC) with a higher percentage of daily activity. 

Throughout 2020, most activities will be concentrated between 2:00 and 14:00 UTC time, which matches the business hours in Asia/Europe. It is particularly busy between 6:00-8:00 UTC time, as shown by the darkest red area. For context, the continuous trading hours of the Hong Kong Stock Exchange are from 1:30 to 8:00 UTC, while the opening hours of the London Stock Exchange are from 8:00 to 16:30 UTC. But in the course of 2021, this distribution shifted to European/American market time later in the day. 

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Source: Coin Metrics Network Data Pro

There are several potential influencing factors. Although Tether issued USDT worth more than 30 billion U.S. dollars on Ethereum, Tether is also issued on many other blockchains, including Tron and Solana. Tether is generally widely used for transactions, and some of the transaction activities may be transferred to other blockchains that can provide lower fees than Ethereum. In addition, due to new government regulations, the relocation of miners and investors out of China may cause a decline in Tether activity in Asia. However, this can only explain the changes since May, not the earlier changes. USDT_ETH is also increasingly used as DeFi protocol collateral, which may lead to some usage changes. 

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In contrast, USDC activities tend to follow the US market time, although its distribution is slightly more scattered. Most daily activities tend to be between 14:00 and 22:00 UTC (the US stock market opens at 14:30 UTC and closes at 21:00 UTC). 

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Source: Coin Metrics Network Data Pro

Since 2020, this distribution has also been fairly stable, which shows that Tether is still the most important stable currency used in the Asian market, although overall activity may be reduced. In contrast, the use of Bitcoin and Ethereum tends to be more evenly distributed throughout the day.

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There are many reasons for adopting USDC and other stablecoins, but compared with traditional settlement infrastructures (such as Fedwire), one of the main benefits of stablecoins is that they are encrypted native payments that can run 24/7, 365 days a year. The heat map below breaks down USDC. Data on the chain shows that USDC is mainly used on weekdays, but there are also some activities on weekends when traditional infrastructure is basically unavailable.

 

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Source: Coin Metrics Network Data Pro

As stablecoins become a larger part of the entire crypto market, they are also receiving more and more attention from the outside world. Regulators are turning their attention to stablecoins at a faster and faster rate, and the imminent rise of CBDC may also affect stablecoins. As stablecoins become a larger part of the crypto ecosystem, it is important to continue to study the usage patterns of stablecoins.

Original: https://coinmetrics.substack.com/p/coin-metrics-state-of-the-network-6d6

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/analysis-of-usdt-and-usdc-usage-patterns/
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