Author: Researcher Jiang Haibo

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• The circulating market capitalization of major stablecoins reached $19.86 billion, an increase of $1.334 billion compared to last week.

• In the past week, 1 billion USDT migrated from Tron to Ethereum. In addition, Tether also issued two additional USDTs on Tron, a total of 500 million USDT; and additionally issued 150 million USDT on Ethereum.

• From September 13th to 20th, the supply of DAI rose from $475 million to $800 million, an increase of 71%.

• Pickle has developed the aggregate mining function of Uniswap LP Tokens for Ethereum and stable currency trading pairs.

• On September 20, Curve set a record one-day trading volume of $519 million.

• 1. Overview of Stablecoin Data

1. Overview of Stablecoin Data

We first review the changes in the basic information of each stablecoin in the past week (September 12, 2020 to September 18, 2020, the same below).

Source: MYKEY, CoinMarketCap, Coin Metrics

Source: MYKEY, CoinMarketCap, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

The circulating supply of USDT has increased by 650 million in the past week. 1 billion USDT migrated from Tron to Ethereum. In addition, Tether also issued two additional USDTs on Tron, a total of 500 million USDT; and additionally issued 150 million USDT on Ethereum. The circulating supply of USDC increased by 260 million, and the circulating supply of DAI increased by 230 million. The circulation of PAX, BUSD, TUSD, and GUSD increased by 23.59 million, 93.97 million, 77.86 million, and 1.35 million, respectively. The circulating supply of HUSD decreased by 1.39 million.

Source: MYKEY, DeBank

Source: MYKEY, DeBank

Source: MYKEY, DeBank

Source: MYKEY, DeBank

Source: MYKEY, Coin Metrics

Active addresses

Source: MYKEY, Coin Metrics

Last week, the number of daily active addresses of major stablecoins decreased by an average of 2.43% from the previous week.

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Compared with the previous week, the number of daily transactions of major stablecoins decreased by an average of 1.18%.

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

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2. The latest progress of the decentralized stablecoin protocol

The blockchain industry is evolving rapidly, and so are stablecoin projects. Last week, several decentralized stablecoin protocols made great progress, and this report will introduce these projects to you.

MakerDAO

MakerDAO is a representative of decentralized autonomous blockchain projects. The stablecoin DAI is the largest on-chain collateralized stablecoin. The governance token MKR can also achieve the unity of rights, responsibilities and interests. With the increase of applications on Ethereum, the supply of DAI appears to be insufficient. In the past three months, the supply of DAI has increased by 545%, but it still cannot avoid the premium when DAI demand is strong. Last week, MakerDAO passed a series of important votes, which can largely solve the DAI premium problem.

The liquidation line of USDC-A and PAX-A has gone through two rounds of voting respectively, from 110% and 120% to 101%

USDC-A’s debt ceiling rises from $100 million to $400 million after two votes

Activate TUSD as collateral, the debt ceiling is 50 million, and the liquidation line is 101%

DAI Global Debt Ceiling Raised to 1.2 Billion

After this series of expansive votes, the supply of DAI rose to $800 million, up 70% from a week ago. The market cap of DAI has also surpassed that of its governance token, MKR. The price of DAI will be closer to the centralized issuance of USDC, PAX, and TUSD. When DAI has a premium of more than 1%, arbitrageurs can borrow DAI near the liquidation line, sell it in the secondary market, and ignore the liquidation risk.

This also poses a centralization risk for DAI. Previously, because DAI was the only large-scale decentralized stablecoin issued on Ethereum, the application of DAI on the blockchain was usually better than that of centralized stablecoins. After that, the line between centralization and decentralization may become blurred.

Pickle 

When the demand for a certain stablecoin increases, there may be a premium of more than 3% in the short term. This situation has become frequent in recent liquidity mining, and users need to switch between different stablecoins. When the enthusiasm for mining passes, the premium will disappear, and users may suffer a 3% loss of principal in the short term. As the yield of liquidity mining decreases, this loss will be unacceptable for many people.

Pickle Finance wants to enable stablecoins such as DAI and sUSD to return to their anchored value ($1) through incentives. Initially, PICKLE tokens will be distributed to pledgers of Uniswap LP Tokens of ETH and DAI, USDC, USDT, and sUSD, four stablecoins. LPs corresponding to stablecoins with lower prices will be rewarded with more PICKLE tokens, which will encourage liquidity providers to sell stablecoins with high prices and buy stablecoins with low prices.

The Pickle Swap function will help users complete the conversion of LP Tokens with one click, including the conversion between platforms (currently only supports switching from SushiSwap to Uniswap) and the conversion of LP Tokens between different stablecoins and ETH within the platform.

pJar is a smart pool in Pickle. Users can pledge Uniswap LP Tokens. pJar will help users automatically mine UNI and sell it for more underlying assets. pJar realizes aggregate mining of Ethereum and stablecoin LP Tokens on Uniswap. After users pledge Uniswap LP Tokens in pJar, they will get pToken. If they pledge UNIV2 DAI/ETH LP, they will get pUNIDAI. Over time, 1 pUNIDAI will correspond to more UNIV2 DAI/ETH LPs. Staking pUNIDAI will also get additional PICKLE rewards.

Although Pickle Finance may not be able to achieve the goal of returning the stablecoin to the anchor value, this direction is worth striving for. Because of Uniswap’s token incentives, more and more stablecoins and ETH trading pairs will be used for mining on Uniswap, and pJar aggregate mining will also be more useful.

Curve

Curve was originally a stable currency exchange protocol. With the development of cross-chain assets, there are now many bitcoin-anchored coins on the platform. When trading in Curve, the platform only charges a 0.04% handling fee. In August, after Curve’s platform currency CRV was issued, the funds on Curve rose from less than US$300 million to more than US$1 billion. Now, there are $1.6 billion in assets on Curve. On September 20, the one-day trading volume on the Curve platform hit a record of $519 million.

The price of CRV has dropped from $30 at the beginning of issuance to $1.4 now, and the annualized rate of return of pool y has also dropped to 14.39%, but there are still more than $600 million in stable coins in pool y. The reduction in mining yield did not reduce the amount of funds and transaction volume in Curve. It can be seen that Curve’s token incentives are effective, and users have not lost a large number of users after the decline in revenue.

Swerve

Swerve was forked from Curve two weeks ago. Its governance token SWRV has no team reservation and no pre-mining. Swerve also optimizes the Gas fee in use. Because of the high incentives in the early stage, the total locked-up volume in Swerve reaches a maximum of 900 million US dollars. However, there is a fatal problem with Swerve's economic model, which allocates 9 million SWRV in the first two weeks, and then allocates 9 million SWRV in the following year. Last weekend, SWRV completed its first production reduction, and now the total lock-up volume in Swerve is less than 20 million US dollars. A decrease in locked positions will increase transaction slippage, which will affect the user experience of Swerve.