Flipside Crypto - USDC, USDT & DAI Activity - Q4 2020

What Are the Top Stablecoins Used For?

Above is a labeled view of all USDC, USDT, & DAI transactions in Q1 2020. Scroll down to view what it has evolved to today.
 

The Growth of Stablecoins

At the beginning of the year, the total supply of stablecoins in circulation was at around $5 billion. Today, it stands at over $25 billion. 

Their yearly transaction volume in 2019 totalled $250 billion. 

In 2020 year to date, over $1,000 billion have been settled on chain using stablecoins. 

This exponential growth can be attributed to several factors, mainly the explosion of DeFi and the yield farming food token craze, the popularity of stablecoin-collateralized derivatives, and Bitcoin getting replaced by stablecoins as the base currency in spot trading. 
 

Stablecoin Activity in Q1 2020

The visual above shows a Q1 User Activity map of USDT, USDC and DAI - the 3 most popular stablecoins - on Ethereum.
 

• Each point is an Ethereum address, and each colored line is a token transfer. The graph is annotated with labels for known exchanges and DeFi platforms.

• Each line on the graph represents two connected user addresses. Think of this line as a spring. These springs pull the addresses in different directions until they settle into an equilibrium. The more transactions between a group of addresses, the closer together they will be on the graph. 

The resulting layout reveals the inherent structure of the network at the time: 
 

• Addresses that only interact with DeFi applications are clustered together on the right.

• ​Addresses that solely use stablecoins to transact with centralized exchanges are clustered together on the left.  

• Addresses interacting with both groups - Coinbase, for example - are located in the middle.

And it showed that each stablecoin had a distinct use case: 
 

• USDT was mainly used for arbitrage on centralized exchanges in Asia. 

• USDC was starting to gain some ground in DeFi

• DAI had the vast majority of its usage in the DeFi space. 
  
   

​Stablecoin Activity in Q4 2020

While Tether (USDT) is by far the largest stablecoin in terms of market capitalization (currently surpassing $19 billion), USDC and DAI have clearly taken over the DeFi space as the preferred stablecoin. 

In the past year, Coinbase has helped propel the growth of USDC thanks to the USDC Bootstrap Fund – an endeavor that has supplied $3.1M in capital to DeFi protocols Compound, dYdX, Uniswap, and PoolTogether. $2 million was spent at launch in September of 2019, followed by another $1.1 million in April of 2020. 

Another factor that has helped propel USDC into the DeFi space is ironically the fact that it has been added as a collateral type to Maker - the issuer of DAI. This means users can lock USDC to borrow DAI. 
 

Want to understand how your blockchain's being used? 

If you're a blockchain project we can label your on-chain activity to shed light on who's doing what with your crypto asset(s). Interested? We'd love to show you! Just click below or reach out to hello@flipsidecrypto.com. 

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