- The market rebound in 2023 was not the result of an influx of additional funds into the crypto industry.
- The share of stablecoins on Ethereum in the total supply fell, while on Tron it rose.
- More than 60% of stablecoins’ volume on Ethereum is held at inactive addresses.
The recent rebound in the cryptocurrency market is not directly tied to inflows from outside funds. This conclusion was reached by Sixdegree Lab analysts based on analysis of the stablecoins segment.
According to them, over the past 12 months the aggregate value of stablecoins did not increase, slightly declining from $139 billion in December 2022 to $129.5 billion. This signals that there was no additional liquidity injected into the industry during this period, despite price recoveries, the analysts say.
At the same time, from the peak of $188 billion in 2022, the supply of stablecoins fell by 31%.
Ethereum loses its dominance in the stablecoins market
Currently 53.6% of the segment’s assets are in the Ethereum network, followed by Tron at 37.8%.
The share of Ethereum’s blockchain continually declined from a peak of $100 million to $66 million, a 34% drop. At the same time, the stablecoin supply on Tron steadily increased from $31 billion to $48.9 billion — a rise of 57.7%, in line with market trends.
USDT strengthens its lead
The three leading stablecoins on Ethereum by market share are USDT (56.3%), USDC (30.5%) and DAI (5.07%). Their capitalizations are $40.03 billion, $21.7 billion and $3.6 billion.
However, if the capitalization of USDT on the network grew by 23% over the last 12 months, the others declined noticeably:
- USDC: -47%;
- DAI: -30%;
- BUSD: -93%;
- Others: -79%.
Will Ethereum-based stablecoins drive DeFi again?
About 50% of stablecoin volume on Ethereum is stored on standard user accounts (EOA), another 30% on centralized exchanges and only 5.5% on DeFi protocols. That latter figure peaked at 25% in January 2022.
A substantial influx of stablecoins into the Ethereum network powered the previous bull run in the crypto market, particularly in the DeFi sector, the analysts noted.
But in 2023 a reversal is observed. Sixdegree Lab attributes much of this to the development of L2 networks.
“As infrastructure matures, liquidity becomes a more seamless transition from Ethereum to other blockchains that offer faster and cheaper transactions,” the experts said.
At the same time, the biggest share of the annual decline in stablecoin supply is attributed to DeFi protocols (63% of the total decline) and cross-chain bridges.
The majority of Ethereum-addresses holding stablecoins (94.2%) have balances below $1,000, contributing only 9.28% of the total asset volume.
On the other hand, accounts with more than $100,000 in stablecoins account for just 0.562% of the total addresses, but own 87.6% of the asset supply. However, overall about 60% of coins held on these addresses are inactive and do not contribute to on-chain liquidity growth, the analysts stressed.
according to Moody’s estimates in 2023 the largest stablecoins by market capitalization lost their peg to the underlying asset at least 609 times.