The Block 2020 Stablecoin Report: Supply exceeds $54 billion, total transaction volume exceeds PayPal

By Larry Cermak, Head of Research at The Block

Translation: Lu Jiangfei

In the past year, the stablecoin market has achieved incredible growth, with the current supply exceeding $54 billion and the average monthly on-chain transaction volume reaching $380 billion. Recently, The Block released a 130-page stablecoin market report. The key content of the report is excerpted as follows:

Since January 2020, many stablecoin business indicators have achieved huge growth, such as:

• Stablecoin supply grew from $5.9 billion to $54.2 billion;

• Average monthly trading volume increased from $235 billion to $384 billion;

• The number of addresses holding stablecoins with a balance greater than $100 increased from 284,000 to 1.85 million.

• The average number of daily active addresses increased from 53,000 to 307,000;

• The average daily trading volume increased from 98,000 to 594,000.

However, although various indicators have grown significantly, there are not enough products to support them. In fact, the main reasons for the surge in the stablecoin market last year are as follows:

1. Miners use Bitcoin to repay Tether debt;

2. Tether collateralized derivatives surge in popularity;

3. DeFi and the yield farming craze;

4. In the spot market, Bitcoin has lost its leading position as a “base currency”;

5. Institutional demand for Bitcoin increases.

In 2020, stablecoin transactions reached 110 million with a total transaction value of more than $1 trillion. In comparison, PayPal's transaction volume last year was 154 billion with a total transaction value of approximately $936 billion. From this we can clearly see the difference, in terms of the average transaction value, PayPal is about $60 per transaction, while stablecoins are more than $9,000.

On the one hand, stablecoin transaction fees are indeed slightly higher; on the other hand, stablecoins do not have many other use cases (mainly trading) at present, so most stablecoin transactions are above $100. Among all stablecoin transactions, about 40% of the transaction amounts are between $100 and $1,000.

At present, the cryptocurrency exchange Binance has the largest number of stablecoins. According to data at the end of January, the total amount of stablecoins held by Binance has reached nearly $10 billion. In addition, a large number of stablecoins are also locked in DeFi protocols such as Curve, Aave and Uniswap.

About 40% of the stablecoin supply comes from exchanges, 11% comes from DeFi protocols, and the rest comes from wallets, OTC platforms, trading firms, etc.

The following chart shows the geographical distribution of the two most popular stablecoins, USDT and USDC. USDT is most used in Asia, while USDC is most used in the United States. This is mainly because many Asian exchanges chose USDT stablecoin in the early days.

The vast majority of stablecoins are pegged to fiat currencies and use fiat currencies as collateral, accounting for 96%. The reason for choosing to peg to fiat currencies is mainly because this method is the most scalable and the execution process is also very simple.

As of the end of January, 70% of the stablecoin supply was on the Ethereum blockchain, 27% on the TRON blockchain, and another 3% on OMNI.

There is a shocking data that currently 99% of the stablecoin supply is anchored to the US dollar. There are two main reasons for this: one is that traders still prefer the US dollar, and the other is that non-US dollar stablecoins are more difficult to cash out and the interest rate is relatively low.

Tether is currently the most "market-dominant" stablecoin. Let's take a look at the relevant data:

• Tether accounts for 69% of the stablecoin supply;

• Tether accounts for 63% of stablecoin transactions;

• Among the stablecoin addresses holding about $100, Tether accounts for 87%;

• Tether accounts for 88% of daily active stablecoin addresses;

• Tether accounts for 89% of the daily stablecoin trading volume.