Author: MYKEY researcher Jiang Haibo

To help crypto market participants keep updated on the development status of stablecoins, we launched the MYKEY Stablecoin Report to share our interpretation of the development status of stablecoins and analysis of their development trends. Looking forward to maintaining exchanges with peers and jointly exploring the development prospects of stablecoins.

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• Author: MYKEY researcher Jiang Haibo

• To help crypto market participants keep updated on the development status of stablecoins, we launched the MYKEY Stablecoin Report to share our interpretation of the development status of stablecoins and analysis of their development trends. Looking forward to maintaining exchanges with peers and jointly exploring the development prospects of stablecoins.

• quick preview

• Last week, the market capitalization of major stablecoins increased by $723 million to $13.408 billion.

• The circulation of USDT increased by 690 million, an additional 240 million was issued on Ethereum, and an additional 450 million was issued on Tron.

• The circulation of DAI rose from 286 million to 374 million, an increase of 30.85%.

• The data on the number of currency-holding addresses, the number of active addresses, the number of transactions on the chain, and the transaction volume on the chain are all positive.

• Coinbase pointed out in the report that 41 of the top 50 universities have offered blockchain-related courses.

1. Overview of Stablecoin Data

The G7 working group mentioned in a survey report that stablecoins, regardless of their size, face legal and regulatory risks. Only by addressing these risks can the potential benefits of stablecoins be realized.

We first review the changes in the basic information of each stablecoin in the past week (July 25, 2020 to July 31, 2020, the same below).

Source: MYKEY, CoinMarketCap, Coin Metrics

Source: MYKEY, CoinMarketCap, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

In addition to USDT, USDC accounts for half of the circulation of other major stablecoins, and the proportion of DAI has increased significantly recently. In the past week, the circulation of DAI rose from 286 million to 374 million, an increase of 30.85%. DAI’s share of stablecoins other than USDT rose from 13% to 16.8%.

The proportion of USDT on Omni is getting lower and lower, and the proportion on Tron is getting higher and higher. At present, the circulation of USDT on Omni, ETH, and Tron is 1.34 billion, 6.4 billion, and 3.45 billion respectively, and their proportions are 11.93%, 57.19%, and 30.87% respectively.

Source: MYKEY, DeBank

Source: MYKEY, DeBank

Source: MYKEY, DeBank

The number of holding addresses of USDT, USDC, PAX, TUSD, and DAI increased by 24,627, 3,555, 693, 321, and 2,578 respectively.

Active addresses

Source: MYKEY, Coin Metrics

Active addresses

Last week, the number of daily active addresses for major stablecoins rose by an average of 14.5% from the previous week.

Source: MYKEY, Coin Metrics

Number of transactions on the chain in 24 hours

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Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

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Source: MYKEY, Coin Metrics

Last week, the average daily transaction volume of major stablecoins increased by an average of 55.4% compared to the previous week. On July 27th and 28th, the transfer amount of USDT on Ethereum was relatively high. In these two days, USDT was issued 120 million more each day on Ethereum. The proportion of USDT’s on-chain transaction volume is on the decline.

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2. Stablecoins out of the circle

Stablecoins are an effective medium of exchange for cryptocurrencies. Cryptocurrencies such as Bitcoin have very high volatility, and investors can use stablecoins to hedge. Holding a certain proportion of stablecoins in the investment portfolio can effectively reduce the overall risk. Stablecoins are playing an increasing role in the cryptocurrency market and accounting for an increasing percentage of cryptocurrency transaction volume. At the same time, the use of stablecoins outside the circle is also increasing. In this report, we will introduce to you the out-of-circle usage of stablecoins.

Research by the International Monetary Fund (IMF) believes that consumers will gradually switch to new payment methods that are more useful than existing payment methods. The out-of-circle use of stablecoins should focus on "usefulness". For example, payment costs can be reduced, payment efficiency can be improved, and payment friction can be eliminated. To this end, we have summarized the following points of outsiders' demand for stablecoins.

Cross-border transfers. It often takes several days for traditional banks to process cross-border transfers, and stablecoins broaden the global remittance channels. Satoshi Nakamoto wrote in the Bitcoin white paper that Bitcoin is a peer-to-peer payment tool. In the past few years, some companies did use Bitcoin for cross-border transfers. But now, this usage scenario is basically replaced by stablecoins, whose stable value makes stablecoins more suitable for transfers.

settlement tool. JPM Coin issued by JPMorgan Chase is a representative of stable currency used for settlement. Customers can receive the same amount of JPM Coin when they deposit funds in the designated account of JPMorgan Chase. JPM Coin is actually a Digital Depository Receipt (DDR) generated by JPMorgan Chase for fund settlement. It is just a settlement tool and can only be used within the JPMorgan Chase banking system.

Payment instrument. Paying with stablecoins has lower handling fees. Terra is a relatively well-known stablecoin payment project with more than 1.8 million users. For large payments, it is more advantageous to use Terra for payment.

Hedging the risk of fiat currencies. In some countries where the risk of legal currency depreciation is high, it is necessary to hold a certain proportion of foreign exchange, and stable currency is a tool that is easier to obtain and easier to store.

The barrier to use is low. It is relatively simple to purchase USDT from OTC channels, but paying with PayPal requires a VISA/Master credit card. As of the third quarter of 2018, the per capita holding of bank cards in China was 5.31, and the per capita holding of credit cards was 0.47. People with credit cards tend to have more than one, and most Chinese don't have a credit card and can't use PayPal.

Gray and illegal trade. Due to the lack of regulation, various illicit websites support payments in cryptocurrencies, including stablecoins. The smart contract address 0x8a91c9a16cd62693649d80afa85a09dbbdcb8508 is marked as MMM BSC in Etherscan. MMM is a well-known pyramid scheme fraud organization in the world. In MMM BSC, the core gameplay is still to develop offline, and you can get benefits from the following 1st generation - 51st generation offline. In May, the daily PAX transactions of this contract address accounted for 40-50% of the total PAX transactions.

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Source: MYKEY, Coin Metrics, Etherscan

Facebook announced the launch of Libra. In December 2019, the monthly active users of Facebook family products (Facebook, Instagram, Messenger, WhatsApp) were 2.9 billion, and 2.3 billion people use it every day. Libra's influence is so great that Zuckerberg, the founder of Facebook, also attended the hearing of the US Congress. As a Facebook user, you may know that there are products such as stable coins.

Development of Central Bank Digital Currency. China, Japan, the European Union, etc. are all researching central bank digital currency, and they will inevitably popularize digital currency to people before it is officially put into use. For example, at the end of last year, Chinese state leaders mentioned the central bank's digital currency many times in their speeches, and Mu Changchun explained the central bank's digital currency and Libra in a class. Central bank digital currency is a kind of stable currency. The popularization of central bank digital currency will let some ordinary people know about stable currency.

Popularization of blockchain knowledge. According to the Coinbase report, 41 of the top 50 universities have offered blockchain-related courses. Gen Zers may have learned about Bitcoin straight from school. Blockchain courses will definitely talk about Bitcoin, and it is possible to recognize stablecoins from it. After the speech on October 24 last year, many people began to take the initiative to understand the blockchain. In addition, the attention of some celebrities outside the circle has also led to the spread of blockchain knowledge. For example, JK Rowling retweets and asks "I don't understand Bitcoin, please explain to me", which will let her fans outside the circle learn about Bitcoin and blockchain.

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• Source: Coincase reports

• For merchants, there is not too high a threshold for depositing and withdrawing funds using stablecoins. Almost all exchanges support USDT, and more and more OTC transactions are opened. Even if the source is not completely legal, it usually does not attract too much attention, and privacy can also be achieved through currency mixing operations. If you want to withdraw cash through the exchange completely legally, you can also exchange USDT, etc. for assets supported by compliant exchanges such as BTC in other places, and then sell them on compliant exchanges that support legal currency.

• The G7 working group mentioned in the report Investigating the impact of global stabecoins that only by addressing the risks can the potential benefits of stablecoins be realized. Stablecoins, regardless of size, face the following legal and regulatory risks:

• legal certainty

• Sound governance mechanisms, including investment rules and price stabilization mechanisms

• Money Laundering, Terrorist Financing, and Other Forms of Illegal Financing

• Cyber ​​Security and Resilient Operations

• tax compliance

tax compliance

3. Readers ask questions

It can be seen that stable currency is indeed a useful payment tool, and its use outside the circle is increasing. It is believed that with the improvement of laws and regulations, the use of stablecoins will be popularized.

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3. Readers ask questions

2. DAI represents the infrastructure of decentralized finance, and USDT represents the infrastructure of centralized finance. Does the world need DAI or USDT? Another expression: Does the world need DeFi or CeFi?

In order to better communicate with people in the industry, we have decided to add two sections for readers' questions and guest opinions. If readers have questions about stablecoins, please contact us, and we will select meaningful questions to answer in the next issue. At the same time, industry guests are welcome to come here to share your views on stablecoins. Contact: jianghb@mykey.org

This issue of the MYKEY stablecoin report has shared so much, please pay attention to the follow-up reports. In the follow-up reports, we will provide you with more interpretations of the development status of stablecoins and analysis of their development trends, so as to help you continuously update your understanding of the development of stablecoins.