Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley), Author: Mike Co, translation: Ling Jie, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Crypto Valley Live (ID: cryptovalley)"Crypto Valley Live (ID: cryptovalley)
, Author: Mike Co, translation: Ling Jie, reproduced by Odaily with authorization.
The size of the stablecoin has grown by almost $3 billion in recent days.
In simple terms, a stablecoin is a digital currency designed to maintain price parity with a "stable" asset. Stablecoins can 'peg' their value to fiat currencies, gold, other digital currencies, exchange-traded commodities, etc.
. At present, there are at least 9 major stablecoins in operation in the world, such as USDC, USDT, BUSD, etc.
For example, the USDC stablecoin can be exchanged for U.S. dollars at a one-to-one ratio through platforms such as Coinbase and Circle. Coinbase currently supports USDC, a non-currency-backed stablecoin. Like many other stablecoins, USDC currently runs on the Ethereum blockchain.
Stablecoins like USDC are immune to the volatility of non-pegged cryptocurrencies like Bitcoin and Ethereum, while inheriting some of their strongest properties:
Open, global, accessible 24/7 to anyone on the Internet"Transfers are fast, cheap and secure"Digitally native and programmable
The primary use of stablecoins today is as a safe haven from cryptocurrency volatility and as a bridge to transfer value between exchanges. In addition, applications of stablecoins in global commerce, traditional financial settlements, and as collateral for decentralized finance are also emerging. As a result, the stablecoin ecosystem is experiencing massive growth as bitcoin and ethereum prices have experienced historic volatility in recent days. According to data from CoinMetrics, as of April 20, the total market value of stablecoins has risen to an all-time high of more than $9 billion, of which USDC is $730 million.
While driven by the typical hedging of stablecoins benefiting from BTC volatility, there may also be macroeconomic forces driving demand. Global investors are dumping assets and shelling out big bucks to swap local currencies for dollars, according to a March Wall Street Journal article, "The World Hungers for Dollars." During the financial crisis, the demand for dollars was
flee to safety
The number of cases has always increased. A proxy for demand for the greenback, the DXY U.S. dollar index recently surged to multi-year highs. (DXY measures the dollar against a basket of currencies such as the euro, yen and pound.)
Stablecoins are an innovative mechanism for global investors seeking exposure to the U.S. dollar. For example, USDC can be transferred to countless personal cryptocurrency wallets or global exchanges within minutes and with minimal fees, 24 hours a day. USDC has no concept of national borders, and anyone in the global cryptocurrency ecosystem can obtain and hold USDC. Since the beginning of March, USDC’s market capitalization has soared from $457 million to an all-time high of more than $700 million."。
Similarly, USDC’s on-chain value transfer has recently hit an all-time high of nearly $400 million per day. USDC has also moved over $26 billion in on-chain funds since its creation. One possible explanation is that USDC's bridge to transfer value between global exchanges is rapidly developing. (For context, USDC is currently traded on many centralized and decentralized exchanges around the world)"DeFi"Across the larger cryptocurrency ecosystem, stablecoins have made significant gains over the past two years in terms of relative transferred value. In March, stablecoins totaled ~40% of their daily relative transfer value compared to the two largest non-pegged cryptocurrencies, Bitcoin and Ethereum. It’s worth noting that many stablecoins currently run on Ethereum’s blockchain, although Ethereum’s native transfer value has dropped significantly compared to Bitcoin.
Stablecoins maintain several advantages over traditional banking. Setting up a cryptocurrency wallet to transfer stablecoins (e.g. through a self-custodial Coinbase wallet) is much easier than setting up a bank account, especially for people outside the US, the accessibility of cryptocurrency software and the popularity of stablecoins in the future , may prove to be very valuable for the unbanked. Or according to the BIS:
“In principle, retail stablecoins could enable multiple payment methods and serve as a gateway to other financial services. In doing so, they could replicate the role of transaction accounts, which are a stepping stone to wider financial inclusion
Additionally, a new category of financial services known as", that decentralized finance has been created so that stablecoins can be programmatically borrowed, lent, and used as collateral. For smart contract lending agreements, such as Compound, dYdX, Nuo, and Aave, the current annual interest rate range of USDC is 0.44-2.36% (as of April 1), and the historical annual interest rate is higher."。
Regarding the evidence of the use of these stablecoins for different purposes on the chain, we can compare the daily active addresses. By calculating the daily active addresses, we found that USDT is the leader among stablecoins. The daily active addresses of Sai, USDC, Dai, and Pax have been hovering around 3K, while USDT is clearly leading with a daily active address of 50K, and GUSD (Gemini), HUSD (Huobi), and BUSD (Binance) are less than 100 daily active addresses next in line.
