USDT thunderstorm worries are gradually disappearing, and the stablecoin market pattern, which has grown 10 times a year, has changed
Produced | Vernacular Blockchain (ID: hellobtc)
Author | hebao
Produced | Vernacular Blockchain (ID: hellobtc)
On June 30th, Circle and Coinbase jointly founded USDC, a compliant USD stablecoin, saying that it will be available on 10 public chains including Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos and Tron in the next few months Issued one after another.
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01 With a 10-fold increase in one year, the "Troika" has initially taken shape
The use scenarios of stablecoins initially focused on the basic needs of deposit and withdrawal channels and anchored fiat 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 a single additional issuance were relatively moderate. It was not until 2020 that everything began to enter a new stage.
The first is the rhythm change in the first half of 2020. From the stable entry demand after "312" and the global environment of flooding global liquidity under the superimposed epidemic situation, USDT began to shift gears significantly from April, the pace of additional issuance was significantly shortened, and the scale of single additional issuance was also significantly increased.
Immediately after that is the "DeFi home field" starting in the second half of 2020. The DeFi native scene that surged in the "DeFi Summer" in the middle of last year has greatly stimulated the demand for stablecoins. The possibility of income combination in the stablecoin market has been discovered, and the stablecoin market has ushered in a real blowout of "demand drives supply". .
The exchange models such as U-standard contracts that have gradually emerged in the future have further expanded the usage scenarios for stablecoins represented by USDT, and the additional issuance of USDT has also begun to accelerate significantly, entering a typical period of rapid expansion.
According to data from CoinGecko, as of July 3, the total market value of stablecoins on the entire network has exceeded 112.7 billion US dollars, compared with only about 12 billion US dollars in the same period last year. The achievement in one year is 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 dizzying and rapid iteration of the DeFi world has also broken the original USDT market structure of "a single player". In order to meet more usage scenarios, multiple rounds of innovations have taken place on the stablecoin track, and a stablecoin ecology of the "troika" has been formed:
The anchored legal currency stablecoins represented by USDT (first), USDC (second), and BUSD (third) appeared first, and currently have the largest market share;
Asset-backed stablecoins represented by DAI (fourth) have achieved decentralization to a certain extent, and have steadily expanded in the DeFi world;
Algorithmic StablecoinsAlgorithmic StablecoinsThe currency system is established through market supply and demand, which has achieved "decentralization" to the greatest extent, and is still in the early stage of market verification;
The current development trend of the three tracks can also be seen from the market value rankings. Although the anchored fiat currency stablecoins still occupy the absolute mainstream, the long-tail demand outside the mainstream, asset-backed stablecoins, and algorithmic stablecoins are also barbaric in one world. grow.
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02 "One family dominates" no longer, USDC has a strong momentum
However, apart from USDT, it can be seen clearly that the growth of USDC is almost far higher than that of all other stablecoins such as Dai, BUSD, UST, TUSD, PAX, etc., and even has the momentum of approaching USDT.
As we all know, since the birth of USDT, the doubts of "vicious additional issuance, market manipulation" and "insufficient margin" have been everywhere, but it has never had a substantial impact on its near-monopoly market position.
Especially after September 2017, as almost the only legal currency deposit and withdrawal channel, USDT is even more in the limelight. It is further deeply bound to the entire market, and it is quite "too big to fail". At 80% or even higher, until the restructuring of the pattern since this year.
According to The Block data, while the stablecoin market volume exceeded 112.7 billion U.S. dollars, USDT’s market capitalization ratio dropped from 86% to about 60% currently, while USDC rose from 6% to about 25% currently. The circulation has increased from USD 2.5 billion at the beginning of the year to USD 25.5 billion. In less than a year, the circulation has increased by 10 times, compared with the USDT circulation of only about 4 times.
Under the ebb and flow, USDC, as the USD stablecoin with the strongest compliance attributes, has increased by more than three times in the past year, and is expected to substantially challenge the status of USDT. In particular, USDT has rarely been issued in the past six months. 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.
USDC, with a total market value of 25.5 billion US dollars, is currently issued on the five chains of Ethereum, Algorand, Stellar, Solana, and Tron. If we continue to expand the remaining nine public chains as mentioned at the beginning of the article, it will undoubtedly play a role in DeFi It will become larger and larger, thereby further reducing the demand for USDT.
At the same time, USDC, which is backed by Coinbase and Circle, tries to become the main medium connecting the traditional financial world and the encrypted world, so as to help traditional funds enjoy DeFi services in a compliant and convenient way.
Among them is an interesting nesting doll: currently the largest non-anchored fiat currency stablecoin DAI, 60% of its own collateral is the anchored stablecoin USDC, which means 60% of the DAI issuance reserves Backed by USDC.
This not only explains the unavoidable collateral quality dilemma of asset-backed stablecoins like DAI (the exploration significance of algorithmic stablecoins is highlighted), but also shows that USDC, which currently has the strongest compliance attributes, plays a pivotal role in the stablecoin landscape.
Just at the end of May, Circle, the USDC issuer, announced the completion of a large-scale financing round of US$440 million, including Fidelity, Digital Currency Group, cryptocurrency derivatives trading platform FTX, Breyer Capital, Valor Capital, etc.
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03 "Compliance", the biggest variable
To be honest, like USDT’s current market value of 62.7 billion US dollars, the huge demand for collateral behind it cannot escape the inevitable scrutiny of supervision. Compliance is destined to be an unavoidable theme for the currently expanding stablecoin market.
From this point of view, USDT’s market share has decreased by 20% within one year, of which it has decreased by 15% in the first half of this year alone, which is likely to be caused by regulatory factors based on compliance requirements. It also leads to the continuous compression of its usage scenarios, and currently mainly serves the exchange and transfer needs of CEX.
The stable currency itself has entered a new stage of development under the background of the crazy additional issuance in 2020 and the surge in demand for DeFi. Next, whether it is the deep binding and use in the encrypted world, or the cross-border payment that breaks the circle and goes out of bounds will play a more important role in the process.
Therefore, as an "intermediate business" project that urgently needs regulatory approval and needs to actively expand incremental growth, compliance is the top priority. Coinbase, for example, is almost invincible by virtue of compliance alone.
As early as January 4 this year, the OCC (U.S. Office of the Comptroller of the Currency) actively expressed its position to encourage the banking system to adopt stablecoins, and directly issued an open letter "allowing U.S. banks to use public blockchains and U.S. dollar stablecoins as the settlement infrastructure of the U.S. financial system." At that time, the co-founder and CEO of Circle (USDC issuing company) tweeted his welcome, 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 to trading platforms.
As for other stablecoins, if they want to seek the mainstream beyond the long tail in the next competition, perhaps compliance will be a core factor that cannot be avoided.
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