On June 30th, Circle and Coinbase co-founded the compliant USD stablecoin USDC, which stated that it will be available on the 10 public chains of Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos and Tron in the next few months. Released successively.
Immediately after July 1, USDC issued more than 100 million U.S. dollars in circulation on Tron. It seems that the midfield battle of stablecoins has finally begun to have different changes.
A surge of 10 times a year, the “troika” has taken shape
The use scenarios of stablecoins initially focused on the basic needs of deposit and withdrawal channels and anchored legal currency exchange, which also stimulated the birth and development of the first generation of stablecoins based on USDT.
However, the expansion of the stablecoin market at that time was still under the background of “external demand” stimulation, and the pace of additional issuance and the scale of single additional issuance were relatively slow. It was not until 2020 that everything began to enter a new stage.
The first is the change of rhythm in the first half of 2020. After the “312” market has stabilized the market entry demand, combined with the overall global liquidity environment under the epidemic, USDT has started to shift significantly since April, the pace of additional issuance has been significantly shortened, and the scale of single additional issuance has also increased significantly.
Immediately there will be the “DeFi home stadium” starting in the second half of 2020. The DeFi native scene that surged in the “DeFi Midsummer” in the middle of last year has greatly stimulated the demand for stablecoins, and the possibility of income combination in the stablecoin market has been tapped, and the stablecoin market has ushered in a real “demand-driven supply” blowout. .
The subsequent gradually emerging exchange modes such as U-standard contracts have further expanded the usage scenarios for the stable currency represented by USDT, and the additional issuance of USDT has also begun to accelerate significantly, entering a typical period of rapid expansion.
According to CoinGecko data, as of July 3, the total market value of stablecoins on the entire network has exceeded 112.7 billion U.S. dollars, compared with only about 12 billion U.S. dollars in the same period last year. The market volume has increased by 100 billion U.S. dollars within one year, which is a surge of nearly 10 times. The results in one year are 10 times the sum of the increments in the past few years.
At the same time, in addition to the rapid increase in volume, the dazzling rapid iteration of the DeFi world has also broken the original USDT “dominant” market pattern. In order to be able to meet more usage scenarios, multiple rounds of innovation have taken place on the stablecoin track, and a “troika” stablecoin ecology has been formed:
- With USDT (first), USDC (second), BUSD (third), represented by anchor method class currency stable currency appears the earliest, is also the largest market share;
- The asset-backed stablecoin represented by DAI (fourth) has achieved decentralization to a certain extent, and has steadily expanded in the DeFi world;
- Algorithmic stablecoins represented by UST (fifth) and FEI (eleventh) establish a monetary system through market supply and demand, achieving “decentralization” to the greatest extent, and are still in the early stage of market verification;
From the market value rankings, we can also see the current development trend of the three tracks. Although the anchored fiat currency stable currency still occupies the absolute mainstream, but the long-tail demand outside the mainstream, asset mortgage stable currency and algorithmic stable currency are also barbaric in the world. Grow.
For example, DAI mainly serves the various needs of the DeFi native population, while BUSD has a solid position as the main stable currency settlement asset on the Binance trading platform and BSC chain, and other stable currencies are more of a market supplement.
“Domination of one family” is no longer, USDC is gaining momentum
However, in addition to USDT, it is obvious that the growth of USDC has almost far exceeded all other stable currencies such as Dai, BUSD, UST, TUSD, PAX, and even the momentum of USDT.
As we all know, since the inception of USDT, doubts about “malignant additional issuance, market manipulation” and “not having sufficient margin” have always followed, but it has never had a substantial impact on its near-monopoly market position.
Especially after September 17th, as almost the only channel for deposit and withdrawal of legal currency, USDT is even more in the limelight. It is further bound to the entire market and has a tendency of “too big to fail”, and its market value has remained the same throughout the year. At 80% or even higher, the pattern has been reconstructed until this year.
According to The Block data, while the volume of the stablecoin market exceeded 112.7 billion U.S. dollars, the share of USDT’s market value dropped from 86% to about 60% at present, and USDC rose from 6% to about 25% at present. The circulation has increased from USD 2.5 billion to USD 25.5 billion at the beginning of the day. In less than a year, the circulation has increased 10 times, compared to only about 4 times the circulation of USDT.
Under this trend, USDC, as the most compliant USD stable currency, has grown by more than three times in the past year, which is expected to substantially challenge the status of USDT. In particular, it is rare for USDT to have no additional issuance in the past June. According to this trend, in the next few weeks, the proportion of USDT is likely to drop below 50% for the first time in history.
The USDC with a total market value of US$25.5 billion is currently issued on the 5 chains of Ethereum, Algorand, Stellar, Solana, and Tron. If we continue to expand the remaining 9 public chains as mentioned at the beginning of the article, it will undoubtedly play a role in DeFi. Will become larger and larger, thereby further reducing the demand for USDT.
At the same time, USDC, backed by Coinbase and Circle, is also trying to become the main medium connecting the traditional financial world and the encrypted world to help traditional funds enjoy DeFi services in a compliant and simple manner.
Among them is a very interesting doll: currently the largest non-anchored fiat currency stable currency DAI, 60% of its own collateral is anchored stable currency USDC , that is, 60% of the DAI issuance reserve Supported by USDC.
This not only illustrates the inevitable collateral quality dilemma of DAI, which is an asset-backed stablecoin (the exploration significance of algorithmic stablecoins is highlighted), but also shows that USDC, which has the strongest compliance attributes, plays a pivotal role in the stablecoin landscape.
At the end of May, USDC issuer Circle announced the completion of a large-scale financing of US$440 million. Institutions include Fidelity, Digital Currency Group, cryptocurrency derivatives trading platform FTX, Breyer Capital, Valor Capital, etc.
Among them, in addition to the heavyweight players in the FTX circle, both Fidelity and Digital Currency Group have traditional financial forces behind them, and the information is worthy of fun.
“Compliance”, the biggest variable
To be honest, like USDT’s current market value of US$62.7 billion, the huge demand for collateral behind it cannot avoid the inevitable scrutiny of supervision. Compliance is destined to be an unavoidable theme for the current expanding stablecoin market.
From this perspective, the market share of USDT has decreased by 20% in one year, and in the six months since the beginning of this year, it has decreased by 15%. It is very likely that this is caused by regulatory factors based on compliance requirements. It also causes its usage scenarios to continue to be compressed, and currently it mainly serves the exchange and transfer needs of CEX.
The stablecoin itself has entered a new stage of development under the background of crazy additional issuance in 2020 and a surge in DeFi demand. Next, whether it is deep binding use in the encrypted world, or cross-border payment that breaks the circle. In the process, they will play a more important role.
Therefore, as an “intermediate business” project that urgently needs regulatory approval and needs to actively expand incrementally, compliance is even more of the most important. For example, Coinbase is almost invincible by relying on compliance alone.
As early as January 4 this year, the OCC (United States Office of the Comptroller of Currency) actively stated that it encouraged the banking system to adopt stablecoins and directly issued an open letter “Allowing Bank of America to use public blockchains and USD stablecoins as the settlement infrastructure of the US financial system.” At that time, Circle’s co-founder and CEO (USDC issuing company) welcomed the tweet, saying that USDC is ready for this.
At present, USDC has indeed seized this opportunity and has almost become the only “regular army” in the stablecoin market, just like Coinbase is for trading platforms.
As for other stablecoins, if they want to pursue the mainstream beyond the long tail in the next competition, compliance may be a core factor that cannot be avoided.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/worries-about-usdt-thunderstorms-are-gradually-fading-and-the-stablecoin-market-pattern-that-has-grown-10-times-a-year-has-changed/
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