Stablecoin supply has surged past $20 billion, driven by derivatives market
October 16, 2020, 1:36PM EDT
2 min read
The total outstanding supply of stablecoin has surged past $20 billion, according to data compiled by The Block Research.
Most of that growth has been driven by the two largest stablecoins by total supply, Tether and Centre's USDC. In total, the market has grown from $5 billion at the beginning of 2020 to around $20.2 billion today. Tether's USDT comprises approximately 79% of the market.
Part of the growth in stablecoin supply this year has been driven by the surge in the decentralized finance (DeFi) market. Traders can lock stablecoin into a number of non-custodial lending platforms to earn a high-yield.
The breakneck growth of the crypto derivatives market has also likely played a role in the growth of the stablecoin market, specifically that of USDT. Most derivatives venues require traders to put up collateral in the form of stablecoin. BitMEX, which has seen its market share collapse in recent months, is a notable exception that requires bitcoin collateral. Meanwhile, the market share of exchanges that accept USDT collateral have increased relative to BitMEX.
"I think collateral for derivatives is one the main drivers," said Paolo Ardoino of Bitfinex, the sister firm of Tether. "DeFi follows with I would say around 1.5B of allocation (speaking for tether) and then we're seeing miners getting used to sell bitcoin for tethers rather than dollars."
Jeremy Allaire, CEO of Circle, one of the firms behind USDC, noted that stablecoins benefit in both up and down cycles.
"First, when markets are intense and growing, more capital is injected and USDC benefits from that new capital. Once USDC is in circulation, users and holders tend to prefer to hold it vs. returning to the fiat system, so it is relatively 'sticky.' Second, when markets are selling off, demand for USDC grows as people seek to exit risk assets and hold stable-value assets, again with users often holding the USDC as they intend to continue to be active market participants."
Delivering on a vision for an interoperable global standard for dollar digital currency, Circle and TRON have partnered to make USD Coin (USDC) available on the TRON blockchain, which has grown to more than 56 million accounts and nearly 2.5 billion transactions since its founding just four years ago. TRON is home to a broad ecosystem for digital assets in Asia and around the world, and the TRON community can now benefit from easy access to the world's fastest-growing, regulated dollar digital currency.
The Canadian Securities Administrators, an umbrella group for securities regulators in the country, alongside a self-regulatory organization for the investment industry, has released new guidance for crypto exchanges on the use of social media as well as advertising and marketing.
LMAX Group robust technology and familiar institutional grade trading infrastructure (currently processing over 2 billion orders per day in the global FX market) is the solid backbone of LMAX Digital, delivering access to deep institutional liquidity, transparent price discovery, a regulated trading environment and a full custodian trading solution.