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- Stablecoins’s marketcap is increasing by $100 million daily from a month
- Carter views DeFi yields/interest rates as a ‘vacuum sucking in a lot of stablecoins’
- Trends also indicate that the US Dollar backed Tether still dominates 80% of the stablecoin market
On September 3, Coin Metrics co-founder Nic Carter tweeted that stablecoins Binance USD (BUSD), Dai (DAI), HUSD, Paxos Standard Token (PAX), USD Coin (USDC), USDK, Tether (USDT), USDT_ETH, and USDT_TRX has been gaining traction over the past two months and has been doing registering approximately $100 million daily.
He further added that the excitement surrounding Decentralized Finance has been so much that there was hardly any acknowledgement of stablecoins adding $100m on a daily basis since mid-July. With that kind of statistics, Carter views DeFi yields/interest rates as a ‘vacuum sucking in a lot of stablecoins’.
Carter’s views are a reflection of crypto market’s latest numbers. For instance, data from on-chain analytics firm, Flipside Crypto shows that stakeholders of the DeFi ecosystem are opting for USD Coin USDC in order to interact with DeFi protocols.. Crypto investors are also providing liquidity to the likes of Uniswap and Curve.
Crypto-Users React
One Twitter user agreed to Carter’s tweet, drawing attention to the fact that businesses are starting to use stablecoins for cross border payments as they’re faster and cheaper than other money transfer services. Another user felt that APYs are unsustainable, and once that goes down, stablecoins flowing in goes down as well. He also added that there is little incentive for people to bank upon DeFi, especially because of all the tax/regulatory grey areas.
Advantages Stablecoins Offer
The reason so many crypto investors are banking on stablecoins is that they’re linked to an underlying asset, making the nominal value of the holding safe. Trends also indicate that the US Dollar backed Tether still dominates 80% of the stablecoin market. As per data from CoinMarketCap, from the period of July 15 to September 4, Tether’s the total market capitalization went up from $9.2 billion to $13.7 billion.
Regulatory Framework is a Must
Regulators too, are beginning to acknowledge the potentials of stablecoin. Andrew Bailey, Bank of England’s governor, recently stated that stablecoins could offer crucial advantages for UK investors, such as reducing friction in payments.
The advantage of stablecoin is that it tries to address two major factors plaguing cryptocurrency: price volatility and lack of a basic value. Once regulations are stringent, the market could be expected to flourish even more in days ahead.
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