Analyzing the stablecoin landscape from three perspectives: market share, trading volume, and speculation

The stablecoin industry has undergone significant changes over the past year, driven by regulatory changes, crises, and emerging opportunities, each of which has left its mark on the industry. USDT has experienced significant growth, while USDC has shrunk following the regional banking crisis. DAI has recently taken center stage in on-chain transaction volume, thanks to its innovative stablecoin strategy of depositing funds in short-term U.S. Treasuries, which currently offer a high annual percentage yield (APY). Finally, we also examine how the recent rise in cryptocurrency market prices has affected the flow of stablecoins on exchanges .

USDT’s market capitalization has hit new highs recently, consolidating its position as the most widely adopted stablecoin in the cryptocurrency market.

Stablecoin Market Cap

The past year has seen various events for several major players in the stablecoin market. BUSD , once the third largest stablecoin in the market, had to cease operations due to legal issues with US authorities. Since the incident, PAXOS, the operator of Binance BUSD, has been limited to processing withdrawals from users, causing the market value to gradually decline as withdrawals are made. USDC also faced a major setback when it was discovered that its $3.3 billion reserves, which are crucial to maintaining its peg to $1, were stored at the troubled Silicon Valley Bank.

This chain of events allowed USDT, already the largest stablecoin, to attract new users and further expand its market share.

Market capitalization share

As events within the stablecoin industry have allowed Tether, the entity behind USDT, to grow and control the market, USDT has taken a dominant position in the market. The giant currently has a market cap of $84 billion and a stablecoin market share of 68%, consolidating its position as the market's main stablecoin provider.

While Tether has become the leading stablecoin provider, there is still potential for further growth and innovation in the space. This trend is particularly noteworthy as some stablecoin providers now offer cryptocurrency users the opportunity to generate yield. These stablecoins are then used to purchase short-term U.S. Treasury bonds , which are currently offering the highest returns since 2007. This mechanism enables stablecoin holders and cryptocurrency users to access the U.S. bond market without directly participating in the U.S. bond market.

On-chain transaction volume

MakerDAO, the protocol behind DAI, has played a key role in leading this trend as a major innovator. With the relaunch of the DSR (Dai Savings Rate), MakerDAO is enabling users to lock their DAI holdings in smart contracts and earn a return on their assets. This new initiative to purchase US bonds was fully launched in August 2023 when the DSR rate reached its peak, and DAI's on-chain transaction volume has since seen a significant increase. It is clear that advanced users are eager to earn a return on their investment, with transactions over $100,000 accounting for more than 90% of DAI's total transaction volume. For the past two weeks starting on October 15th, DAI has remained at the top of the stablecoin on-chain transaction volume. This achievement is significant, especially considering that it is the third largest stablecoin by market capitalization, which sends a clear signal in the industry.

Finally, the recent rise in cryptocurrency asset prices is also clearly reflected in the stablecoin market.

Trading liquidity

The transaction flow indicator, which refers to assets entering and leaving exchanges, has shown a consistent inflow trend. Inflows are usually associated with users selling assets on exchanges, which is why they move assets to these exchange platforms. This shows that users are currently using previously held stablecoins to purchase crypto assets, which is consistent with the recent surge in prices.

In summary, the stablecoin market has undergone significant changes over the past year, marked by regulatory challenges, crises, and innovative strategies. Despite setbacks faced by some major players such as BUSD and USDC, USDT emerged as the dominant stablecoin with a market cap of $84 billion and 68% of the market. However, there is still room for growth and innovation in the field, as exemplified by the trend of locking up stablecoin returns by investing in short-term US Treasuries. MakerDAO has played an important role in pioneering this initiative, especially with the relaunch of its DSR. The recent surge in cryptocurrency prices has also been noticeable in the stablecoin market, especially with users buying crypto assets, which has led to a continuous inflow of funds into exchanges.