Looking back at the stablecoin process in 2020: transactions soared by 183%, and the usage scenarios are divided

PANews

特邀专栏作者

2020-12-25 10:34 (UTC+8)

This article is about 2464 words, reading the full article takes about 4 minutes

With the great development of stablecoins in 2020, how do you use stablecoins for transactions?

AI Summary

Expand

With the great development of stablecoins in 2020, how do you use stablecoins for transactions?

Produced | Flipside PANews

At the start of the year, the total stablecoin supply in circulation was approximately $5 billion. Today, this figure has exceeded 25 billion US dollars. This article focuses on an in-depth comparative analysis of USDT, USDC and DAI transactions in the current cryptocurrency market and the beginning of 2020.

According to data from CoinMarketCap, it closed at $23,241.34 on December 23. The overall increase in December reached 23.60%, and the currency price remained at a historical high above $20,000 for a week. Good investment performance also keeps the market trading sentiment highly active.

According to MESSARI's monitoring of stablecoin data, as of December 22, the daily trading volume of stablecoins was approximately 71.487 billion US dollars, an increase of approximately 183.63% from January 1. Among them, the daily trading volume of USDT, the largest stablecoin, has increased by 187.65% this year. After mid-November, the daily trading volume of stablecoins has increased significantly, reaching a peak of 189.307 billion US dollars on November 17. However, in terms of growth trends, the upward trend of currency prices is more significant than the growth of stablecoin trading volume.

Judging from the balance of the exchange, under the bull market environment, market funds are generally in a state of influx. According to CryptoQuant's statistics, as of December 23, the total balance of stablecoins on all exchanges was about 2.558 billion, an increase of 126.67% from January 1. The recent total balance has basically stabilized at more than 2 billion.

According to Nansen’s statistics, at present, Binance, Huobi and Uniswap are the three largest stablecoin trading markets. It is worth noting that in the top 15 stablecoin trading volume markets, there are 4 DeFi platforms. In addition to Uniswap, there are Curve, Sushiswap and Balancer.

If we look at the transaction volume data, you will find that the total amount of settlements on the stablecoin chain has exceeded 1 trillion US dollars, which is equivalent to four times that of 2019! The exponential rise is mainly attributable to several factors, such as:

- DeFi boom

- The Rise of Yield Farming “Food” Tokens

- Popularization of stablecoin collateralized derivatives

By tokenizing every USDT, USDC, and DAI transaction, we can analyze which stablecoin people in the DeFi market prefer to use to process transactions.

Before we officially enter the topic, let’s explain how to understand the series of graphs involved in the following. Each point in the graph represents an Ethereum address, and each colored line represents a token transfer. There will also be some well-known Label annotations for exchanges and DeFi platforms. Each line on the diagram represents two connected user addresses, and you can imagine a spring between the user lines, and these springs pull the addresses in different directions until they stabilize. The more transactions between a group of addresses, the closer they are to each other graphically.

Stable currency overweight DeFi application

At the beginning of this year, the cryptocurrency market began to gradually "tilt" towards DeFi. USDT was mainly used in centralized exchanges, DAI was mainly used in DeFi, and USDC was used in both centralized exchanges and DeFi. It is worth mentioning that although Coinbase is a centralized cryptocurrency exchange, many people will still trade DAI on the exchange. Frankly speaking, Coinbase should be between centralized exchanges and DeFi.

image description

secondary title

USDT

Past (picture below left) and present (picture below right: November 2020)

Tether is by far the largest stablecoin by market capitalization, with a market capitalization of over $20 billion at the time of writing. While most Tether trading activity is still concentrated on centralized exchanges, it has likewise gained prominence in DeFi. The chart below clearly shows that since the beginning of 2020, the number of addresses conducting USDT transactions on decentralized trading platforms (as shown in the right figure below) has increased dramatically. Of course, Tether has its own problems, and it is still in legal disputes with the US federal government.

image description

secondary title

USDC

Past (picture below left) and present (picture below right: November 2020)

Since the beginning of this year, USDC has made great progress in the DeFi field, but on the other hand, USDC seems to have lost its appeal to users of centralized exchanges - of course, considering Tether's influence in the field of centralized exchanges, this appears This phenomenon is not surprising.

Circle, a supporter of USDC, has taken a series of decisive steps to promote the rapid growth of this stable currency in the DeFi field. The USDC BootStrap Fund has provided $3.1 million in funding to a number of DeFi protocols, such as Compound, dYdX, Uniswap, and PoolTogether.

On the other hand, by establishing strategic partnerships with governments such as Venezuela and enterprises such as Visa, Circle is gradually promoting the mainstream adoption of USDC.

image description

secondary title

DAI

Past (picture below left) and present (picture below right: November 2020)

Since the beginning of 2020, Maker's decentralized stablecoin DAI is the only encrypted asset that has encountered "Waterloo" in the DeFi field. DAI mainly relies on over-collateralization with non-US dollar encrypted assets to maintain its exchange rate pegged to the US dollar. It is truly decentralized, not directly backed by US dollar assets like USDC and USDT.

However, the main problem of DAI is the lack of liquidity. This problem will cause DAI to fail to meet market demand, which in turn will cause the DAI peg exchange rate to be too high. On March 12th "Black Thursday" the price of ETH plummeted, and a large number of loans fell below the mortgage threshold, which triggered a liquidation process. The liquidation process was carried out in the form of a mortgage auction. The crash, in which some liquidators won the Ethereum collateral liquidation auction with a bid of 0 DAI, also resulted in MakerDAO being indebted with $4 million in outstanding loans — a similar event happened again in November 2020.

image description