Data visualization of the stablecoin DAI

Editor's Note: This article comes fromEthereum enthusiasts (ID: ethfans)Editor's Note: This article comes from

Ethereum enthusiasts (ID: ethfans)

, Author: Christian Seberino & Danning Sui, translation & proofreading: An Zi Clint & A Jian, reproduced by Odaily with authorization.

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DAI supply growth

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-Fig. DAI supply over time-

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The table below shows the top ten DAI whales and the total amount of DAI they hold:

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Utilization of DAI in various DeFi products

The graph below shows the daily borrowing amount of DAI on different lending platforms over the past 6 months:

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-Fig. Daily Borrowing Amount of DAI Between Lending Platforms (Past Six Months)-

In early May, Compound migrated its own protocol to a new version. Here we only refer to the data of the Compound v2 protocol. It can be seen from the zoning chart that the orange area (Compound v2) has been alternately occupying the second place with the pink area (dYdX), each of which reached a daily borrowing volume of about 3 million at the peak.

The figure below compares the monthly lending activity among the DeFi projects mentioned above. Among them, the development of dYdX's DAI lending volume in the past six months is remarkable: we found through the collected data that dYdX's DAI lending volume surpassed that of MakerDAO on October 17th for the first time since August. In October (as of the 17th), the amount of DAI lending by users on dYdX accounted for almost half (~49.37%) of all major lending platforms.

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Liquidity of DAI on various DEXs

The chart below shows the daily trading activity of several major decentralized exchanges (DEX). It can be seen that OasisDEX is far and away the dominant position, the exchange is derived from the MakerDAO system. According to the monthly transaction volume ranking, Uniswap is ranked second, Kyber is ranked third, followed by RadarRelay.

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-Fig. DAI transaction volume market share of mainstream DEX (2019 data)-

Note that we do not list the 0x protocol here, because the 0x protocol is the underlying protocol of many relay DEXs (such as RadarRelay, Paradex), adding it in the figure will result in duplication of transaction volume. Most of the transaction volume of the 0x protocol has been reflected in RadarRelay, and the shape of the two is very close.

We adopted the same method for dYdX, because it directly uses Eth2Dai of OasisDex as the exchange market. In order to avoid the proportion of the total transaction volume exceeding 100%, we included the transaction volume of dYdX under OasisDex. The actual DAI transaction volume on dYdX is between Uniswap and Kyber, and reached the highest point of monthly transaction volume in June, about 17.9 million.

By combing the above statistics, we can discover the autonomous life cycle of the DAI financial ecosystem. The changing trend and correlation of each data in the time series graph below shows how DAI maintains stability through the incentive-driven behavior of users:

“Dai uses economic incentives to regulate supply and demand. When the price of Dai is higher than $1, anyone can create Dai and sell it for more than it is worth. This way, the supply of Dai in the market increases, making its The price eventually fell back to $1.

Similarly, when the price of Dai is lower than $1, users can repay the accounts in the system at a cheaper rate. They buy Dai at a price lower than $1, and then pay a fixed rate of $1 per Dai repay loan. The Dai used to pay down the debt is eventually burned, reducing the Dai supply and increasing the price.

-Fig. 2019 DAI price vs. supply, transaction volume, lending volume (DAI price source is coinmarketcap.com) -

In early February, the price of Dai started to fluctuate slightly (according to the first and second graphs), potentially explaining the increase in borrow/lend volume in the following days (fifth graph) - on February 24th, DeFi The user borrowed 4.33 million DAI in one day, which caused the broken line of the supply table to turn blue that day (the price rose, and the supply also increased); a total of 88.01 million DAI was generated that day. A rapid increase in supply like this then led to a depreciation of Dai in early April, we can read the -6.54% price drop from the table, potentially explaining subsequent transaction volume (fourth graph) and borrow volume (fifth graph ) rise - when DAI depreciates, borrowers and traders can hold DAI at a lower cost (denominated in US dollars).

It is difficult to infer causality for changes in these variables, which always interact and intervene across the entire economic system. However, it is certain that they have the same phase resonance relationship and are closely related.

DAI Price Fluctuations — Are Stablecoins Really Stable?

We can see above that the price of DAI is largely affected by user behavior, so you may naturally ask a question: Is DAI really stable? Next, we will conduct a beta analysis to compare DAI with other stablecoins and evaluate its risks.

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-Fig. Price table & the price fluctuation performance of each stablecoin in the past 12 months (data source: coinmarketcap.com)-

As can be seen from the table below, the average price of these stablecoins is around $1.00, and the average value of DAI is closest to $1.00. Their variances are not large, and USDC has the smallest variance:

- Table - mean and variance of prices (based on a 365-day window) -

In the above table, we also added the statistical data of ETH and BTC as a comparison of mainstream digital currencies. where the variance is normalized by N-1.

Compared with other currencies in the digital currency market, stablecoins should not have huge price fluctuations. Another way to measure the price volatility of stablecoins is β analysis, which establishes its β value relationship with mainstream digital currency markets (such as Bitcoin and Ethereum) and compares them with each other. The following table shows the β values ​​established by several mainstream stablecoins with Bitcoin and Ethereum:

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• - Table - Stablecoins vs. ETH/BTC beta coefficients (based on a 365-day time window) -

• A token has a beta value of 1 with respect to itself. In the practical analysis of the stock market, this 1 is the critical value for assessing risk:

When β > 1, it means that the volatility of this stock is greater than the market benchmark (the stock market usually uses the SP500 index). This coefficient can also be interpreted as being more sensitive to changes in the market. For example, when the market heats up, this stock may be greatly affected, bringing investors higher returns, but of course, it also implies greater risk.

When β = 1, both have the same volatility.

For the above five stablecoins, we can see that the absolute values ​​of their β coefficients are all less than 0.1, which means that they are more stable than ETH and BTC, and less affected by the trend of the digital currency market. In the appendix, we also attach a table to compare the beta coefficients of other mainstream currencies.

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