A “bearish lull” in the crypto market fuelled progress in stablecoins, with the market capitalization of the highest 5 stablecoins rising by 13% in the primary quarter, in accordance with a brand new report from the coin monitoring web site CoinGecko.
The expansion in the market capitalization of stablecoins is notable provided that it occurred throughout a interval of falling buying and selling volumes and costs in the crypto market in common.
In response to CoinGecko, the rise in the market capitalization of the highest 5 stablecoins — which included tether (USDT), USD coin (USDC), binance USD (BUSD), terraUSD (UST), and DAI — might be attributed to crypto buyers “derisking in the midst of geopolitical and macroeconomic uncertainties.”
High 5 stablecoins market capitalization and buying and selling quantity (Oct 2021 – Mar 2022):
The report famous that USDT stays the dominant stablecoin in the market, though the expansion of this coin “has slowed vastly” in comparison with USDC, BUSD, and UST.
Equally, it mentioned that the expansion of DAI, the decentralized stablecoin issued by MakerDAO (MKR), “has additionally slowed considerably” in comparison with its friends.
Out of the highest 5 stablecoins, UST noticed the strongest proportion progress in market capitalization over the course of the primary quarter, whereas USDC elevated its market capitalization essentially the most in absolute phrases, the report mentioned.
UST is dominant amongst decentralized stablecoins
Commenting on the rise of UST, the decentralized stablecoin issued on the Terra (LUNA) protocol, CoinGecko’s report mentioned that the coin has seen its market capitalization develop by 61% to USD 16.3bn as of the tip of the quarter.
On the similar time, DAI’s market capitalization elevated by solely 3%, the report identified.
With the spectacular progress over the quarter and the overtaking of DAI in December, UST has now consolidated its place because the “dominant decentralized stablecoin,” the report mentioned.
Nonetheless, some doubts exist concerning the UST, CoinGecko mentioned, pointing to a USD 1m bet between Terra founder Do Kwon and critics of his venture who declare that the mannequin used to take care of UST’s greenback peg is unsustainable.
“The first cause for UST’s sturdy adoption is because of Anchor’s excessive lending rates of interest of 20%,” the report mentioned, noting that critics name this yield “unsustainable” and argue that adoption will inevitably “spiral down” when the yield is lowered.
Anchor Protocol (ANC) is a lending platform on Terra used to lend and borrow UST.
In the meantime, the report additionally pointed to Terra’s shopping for of bitcoin (BTC), performed by the Luna Basis Guard (LFG), as a cause for elevated consideration across the UST stablecoin.
The LFG “has emerged to grow to be one of many largest holders of BTC, simply behind Tesla and MicroStrategy,” the report mentioned.
Terra’s Do Kwon beforehand mentioned that LFG plans to buy as much as USD 10bn value of BTC to partially again UST, making it the biggest holder of bitcoin after Bitcoin’s creator Satoshi Nakamoto.
At 12:24 UTC, the market capitalizations of the highest 5 stablecoins, per CoinGecko, are as follows:
- USDT: USD 82.63bn
- USDC: 50.56bn
- BUSD: 17.67bn
- UST: 16.95bn
- DAI: 8.74bn.
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