A recent research paper concluded that the use of stablecoins for speculative activities in the crypto asset industry has declined by 90 percent since 2019.
Circle Internet Financial LLC recently co-authored a research paper titled ‘Beyond Speculation: Payment Stablecoins for Real Time Gross Settlements’, which was featured among three other articles at DC Fintech Week 2023. From the stablecoins research, which was led by Circle Chief Economist, Gordon Y. Liao, the use of fiat-backed stablecoins has increased in the real world and the speculative crypto market has declined significantly.
In particular, the stablecoin market was initially used to gain trust in the digital asset market, but has since evolved into other use cases. Additionally, the mainstream adoption of cryptocurrencies has increased trading volumes for the underlying altcoins and Bitcoin to such an extent that liquidity has significantly improved.
Nonetheless, stable coins are still used by most decentralized finance (defi) protocols that have integrated with various blockchains.
“Payment stablecoins have emerged as a medium exchange and store of value with less speculative and leveraged activities than fiat M2 money. The trading turnover of payment stablecoins is 10 percent of trading stablecoins and 60 percent of fiat M2 dollars,” Circle. noted,
According to the report, the use of stable coins in real-time gross settlement has the potential to reduce the risks associated with concentrated liquidity in the traditional monetary system. Furthermore, stablecoins backed by fiat have the ability to move faster with minimal friction, enabling efficient cross-border payments.
Nonetheless, the report highlights that there is a greater need for the stablecoin market to integrate with existing financial infrastructure to unlock further growth in real-time payments.
stablecoins and market images
According to our latest market data, the total stablecoin market has grown to over $126 billion and the average 24-hour trading volume is approximately $41 billion. In particular, the United States dollar-backed stablecoins have significantly dominated the industry led by the euro, pound and Japanese yen. On Wednesday, PayPal USD (PYUSD) had a market cap of approximately $158 million and a 24-hour trading volume of approximately $3.3 million.
The leading stablecoin by trading volume remains Tethys (USDT) with a market cap of approximately $86 billion and 24-hour trading volume of approximately $28 billion. The second largest is Circle K’s USDC with a market cap of approximately $24.5 billion and a 24-hour trading volume of approximately $8 billion.
However, the stablecoins market has struggled with repeated declines, including Terra Luna UST, which wiped out more than $30 billion, and USDC earlier this year.
According to recent research By Moody’s Analytics, through its new on-chain analysis tool called Digital Asset Monitor (DAM), the top five largest stablecoins were depegged 707 times from January to mid-September this year, including a single day against their fiat currency peg. More than 3 percent was involved. ,
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