The total market capitalization of stablecoins has surged by 30% this year, driven by USDT, USDC, and the recently renamed USDS. This growth has pushed the combined market cap from $130 billion to nearly $170 billion, marking a two-year high that highlights increasing public interest in cryptocurrencies. This surge reflects users’ growing willingness to store funds on the blockchain rather than in traditional bank accounts.
Stablecoins are blockchain-based tokens that are designed to maintain a stable value by being pegged to fiat currencies, which helps reduce volatility. Because of their stability, stablecoins are often used for everyday transactions. However, while each stablecoin aims to maintain its value against a specific fiat currency—such as the U.S. dollar—it achieves this stability in different ways. Some stablecoins are backed by cash and equivalents, while others rely on mechanisms involving crypto assets and short futures positions to maintain their peg.
Since stablecoins are engineered to maintain a steady price, their market capitalization serves as an effective measure of the true size of the cryptocurrency ecosystem. The market cap reveals “how many people are actually comfortable holding funds, or rather, the equivalent of money, on-chain instead of in their bank accounts,” explained Aurelie Barthere, principal research analyst at blockchain analytics firm Nansen.
Here are the top six stablecoins by market cap that are contributing to the 2024 crypto surge:
1. USDT
Market Capitalization: $118 billion
Launched in: 2014
Tether currently issues five stablecoins, with its USDT, pegged to the U.S. dollar, being the largest and dominating nearly 70% of the entire stablecoin market, according to Nansen data. At the start of 2023, USDT’s market share was just 48%, but it has since surged to 70%, representing “a huge gain,” noted Nansen’s Aurelie Barthere.
To maintain USDT’s peg to the U.S. dollar, Tether backs the currency with fiat reserves. As outlined in its June transparency report, these reserves primarily consist of U.S. Treasury bills, money market funds, and overnight reverse repurchase agreements.
The Tron network holds just under 50% of the total USDT supply, with Ethereum accounting for 39%, according to DefiLlama data. Despite Tron holding a larger share, the average USDT transaction size on Ethereum is significantly higher—$38,510 compared to $6,550 on Tron—based on insights from the on-chain intelligence platform Artemis.
2. USDC
Market capitalization: $33.8 billion
Launched in: 2018
Circle’s flagship product, USDC, got to the highest market cap of $55.6 billion in July 2022 but saw a sharp decline, losing more than half of that value by December 2023. This drop in market cap was largely driven by the de-pegging of USDC in March 2023, following the shutdown of two Federal Reserve System member banks—Silicon Valley Bank and Silvergate Bank—where Circle had previously held a substantial portion of its USDC reserves in cash.
Circle’s prominent role in the stablecoin ecosystem is also connected to its partnership with Coinbase, the largest crypto exchange in the U.S. The technology behind USDC was co-developed by Coinbase and Circle, with Coinbase also acquiring an equity stake in Circle. On Base, the layer 2 network developed by Coinbase, the exchange is the largest holder of USDC. According to Nansen data, 20 of the top 21 USDC holders on Base are affiliated with Coinbase, each holding approximately $101 million worth of USDC.
In the first half of 2024, Coinbase earned around $437.8 million in revenue from stablecoins, accounting for more than 14% of the company’s total revenue of nearly $3 billion, as reported in its latest quarterly filing.
3. USDS (formerly DAI)
Market capitalization: $5.3 billion
Launched in: 2014
On Tuesday, MakerDAO, a prominent player in the Decentralized Finance sector, rebranded itself as “Sky” and introduced updated versions of its stablecoin, DAI, and governance token, MKR, which together boast a market cap exceeding $7.1 billion.
Sky distinguishes itself from Tether and Circle by operating through a decentralized autonomous organization (DAO). This structure allows holders of the governance token to influence the platform’s direction, a feature absent from both Tether and Circle, which lack governance tokens.
These developments are part of the initiative known as “Endgame,” a major overhaul that began in 2022. Endgame, which encompasses the rebranding and updates to Sky’s ecosystem tokens, aims to broaden the appeal of DeFi, making it more accessible to a wider audience beyond early adopters, according to a governance forum post.
DAI holders, whose stablecoin is backed by various cryptocurrencies like ether (ETH) and wrapped Bitcoin (WBTC), now have the option to convert their DAI into USDS, the “upgraded stablecoin” of the Sky Ecosystem.
A point of contention in this transition from DAI to USDS lies in the protocol’s inclusion of a freeze function. This feature allows certain authorized entities to control who can use, hold, and interact with the new stablecoin, sparking debate. This capability is also seen in Circle and Tether’s stablecoins.
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