The Post-Splash Reprieve
The cryptocurrency market has been tested in the past few weeks after a string of negative news. The cryptocurrency price plunge has also been a big test for stablecoins, which are increasingly becoming an important part of the ecosystem.
On May 19, a liquidation-induced flash crash sent the price of bitcoin down to nearly $30,000 in a matter of hours. As prices fell, investors often rushed to trade their crypto assets into Tether (USDT), USDC, DAI and other stablecoins. At the same time, liquidation events triggered by falling prices can lead to the selling of stablecoins that were used as collateral. This sudden shift in supply and demand has the potential to disrupt the price of stablecoins from a $1 peg and threaten their stability.
Overall, stablecoins weathered the storm relatively well. Stablecoin prices temporarily spiked after the flash crash. However, most stablecoins remained below $1.01 and fell back below $1.005 within six hours.
In contrast, during the March 2020 crash, the price of the stablecoin spiked above $1.05, and the price stayed high for days afterwards. While DAI rose to well above its $1 price target during March 2020, it stayed closer to its anchor price this time around thanks to some improvements in MakerDAO.
May 19 was also a record day for stablecoin trading volume. Tether (USDT) alone saw over $70 billion in trading volume, more than both Bitcoin (BTC) and Ether (ETH). USDT is often used to trade with BTC, ETH and other crypto assets, which may account for most of the volume.
Unsurprisingly, the number of stablecoin transactions also peaked on May 19 at over 1.5 million. The majority of these transactions were due to Tron’s version of Tether (USDT_TRX).
Tron has the lowest transaction fees compared to ethereum and bitcoin, making it an option for sending relatively small transactions, or transferring funds between exchanges, among other use cases.
Tether is issued on multiple platforms, including Omni (built on Bitcoin), Ether and Tron. over the past year, Tether’s supply has shifted to Tron and now represents 53% of Tether’s total supply (across these three platforms).
However, despite USDT_TRX leading in terms of number of transactions and supply, the Ether version of Tether (USDT_ETH) has still had more transfer value in the last few weeks, suggesting a different usage profile for the Ether and Tron versions of Tether.
Overall, Tether remains the leader in terms of total supply of stablecoins. But others are growing rapidly as well. Since May 12, USDC’s supply has increased by more than $6 billion to a total of more than $20 billion.
Since the beginning of 2021, USDC’s supply has been growing at a faster rate than Tether’s, and its growth rate has increased significantly in the last month. With the recent announcement of $440 million in funding for Circle, the company behind USDC, USDC’s momentum should only increase from here. Tether is still the highest for now, but if current trends hold, USDC could catch up soon.
The cryptocurrency market has mostly traded sideways over the past week after plunging mid-month. both BTC and ETH saw significant price declines, down 35.2% and 68.3% respectively. Amidst market volatility, USDC continued to rise, with total supply up 17.8% week-over-week to a total of over 21 billion.
The value of Wrapped BTC (WBTC) on-chain transfers spiked to $2.9 billion on May 19 and has since averaged over $1 billion per day. The chart below shows the value of WBTC transfers smoothed using a 7-day rolling average.
WBTC supply has grown to more than 181,000 after dropping to about 108,000 earlier this year. The widespread use in DeFi may signal that WBTC is becoming an increasingly important part of the DeFi ecosystem.
Ether’s average Gas price climbed above 324 GWEI on May 19. But since then, it has fallen back to much lower levels. the average Gas price on May 27 was 38 GWEI, the lowest since December 2020
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-did-the-stablecoin-perform-in-the-519-crash/
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