Today I will share with you a stablecoin report for 2024. Researching stablecoins is actually a very good aspect of observing the market, and I will interpret it for you.
There is not much to say about the first page. We have talked a lot about the types and categories of stablecoins before (Binance’s own decentralized stablecoin project-Lista DAO data analysis, Dabing DEFI special-financial platform SOV & stablecoin MOC potential analysis, Binance 50th mining-stablecoin project ENA project analysis & coin price estimation, RWA track 2 project analysis-stablecoin (RSR) + private fixed income (MPL), the next bull market 100x coin series-fractional algorithm stablecoin Frax), but there is an important thing here, it mentions 2 currencies, it says that protocols such as OHM and RAI have tried new free-floating stablecoin models, which operate as fully backed reserve assets (100% collateralized) and are not pegged to any fiat currency. We will come back to study these two projects later.
There are several types of stablecoins mentioned here, including legally-backed stablecoins, crypto-backed stablecoins, and algorithmic stablecoins.
Currently, the mainstream tether requires a handling fee for minting, but USDC does not. Then, tether, USDC, and DAI all require fees for redemption, while other centralized stablecoins do not have this fee. So it is also a way to seize the market, but decentralized stablecoins all have this fee.
USDE’s new stablecoin design
This is a yield-based stablecoin design proposed and advocated by Arthur Hayes after the Terra collapse, who eventually provided funding to the Ethena team to realize this vision. Since the position is Delta neutral, the yield is generated in the following ways:
- Rewards from native protocol staking (collateralized BTC/ETH assets of equal value)
- Funding fees for short positions (lending collateral assets to shorts)
The latter is possible because the historical funding rates for BTC and ETH perpetual contracts are usually positive, that is, there are almost always more longs than shorts, and longs pay short funding fees to keep the contract open. This design removes the reliance on fiat instruments (such as US dollar deposits, treasury bills), but it is not completely on-chain or decentralized - short positions are opened and managed by the project team on the most liquid centralized perpetual contract exchanges.
Short positions are the main source of USDe’s inherent risk. Since its launch, Ethena’s USDe has surged to $3 billion in market capitalization, making it the fourth-largest stablecoin. Other projects, such as Elixir and Superstate, have also begun to adopt this design.
Curve & AAVE are trying out new CDP stablecoins
While these protocols share a similar core collateralized debt position (cDP) mechanism, where users “borrow” stablecoins by collateralizing assets, each protocol has its own innovations in different areas, including:
- A wider range of collateral types: Users can mint GHO using any asset on the Aave V3 Ethereum market, and crvUSD also supports its own range of BTC and ETH collateral. Dai has also experimented with new types of collateral, such as real world assets (RWA).
- Partial Liquidation: All three protocols now offer some form of partial liquidation for borrowers, with crvUSD having the most interesting mechanism, with no fixed liquidation price but instead gradual liquidation via an automated market maker (AMM).
- New anchor stability mechanism: While all three protocols have similar anchor stability modules (PsM) and 1:1 exchange pools with other stablecoins to maintain the anchor, Dai and GHO also provide returns through staking mechanisms to incentivize users to hold.
- Discounted borrowing rates: Users who stake $AAVE in the Security Module can enjoy a discount on GHO borrowing rates.
Despite these innovations, crvUSD and GHO still lag far behind their competitors in terms of market capitalization and trading volume share. However, decentralized stablecoins are still an important innovation in contrast to centralized stablecoins.
Despite the emergence of other competitors, MakerDAO has not stood still and is currently implementing the "Endgame Plan" proposed by founder Rune Christensen.
Changes proposed in the "Endgame Plan" include:
- Reorganize the DAO structure through sub-DAOs to improve efficiency
- Introducing new token economics, including issuing new governance tokens and stablecoins, namely SKY and UsDs
- Rebranded to Sky Protocol
The current total amount of stablecoins is 160 billion, but it is still lower than the peak of 180 billion in 2021. Overall, it has been on an upward trend since 2023.
Commodity-backed stablecoins are in a growing state, especially gold-studded ones such as XAUT and PAXG which currently account for 78% of the market share as gold has grown rapidly this year.
This shows that the market share of stablecoins is proportional to the bull market. The bigger the bull market, the higher the proportion of stablecoins. For example, at the beginning of 2020, stablecoins accounted for only 2%, but in 2021, the proportion of stablecoins reached a maximum of 9%. It is currently 8%, but it does not mean that it is a bull market. It can only be said that this wave of stablecoins has developed. As can be seen from the graph, there is still a big gap.
This mainly explains that currently part of the stablecoins have flowed from L1 to L2, such as arb and op, and the top public chains have all had outflows, such as eth, bsc, sol, etc., but Tron has increased by 16%.
The addresses of stablecoins are increasing, and there are currently 8 million addresses, especially addresses of usdt and usdc.
There is a line that stands out in this graph, which is the white frax. The number of addresses has increased 10 times. You should pay attention to the fractional algorithm stablecoin frax, which I have mentioned before.
Due to the high interest rates in the United States, the returns on these stablecoins are also high, almost outperforming the yield on the one-year U.S. Treasury bond.
In conclusion, although stablecoins were initially backed by Tether and fiat reserves, the field has continued to evolve and now even includes mixed reserve stablecoins with yields. One of the most anticipated new stablecoins in recent times is Ethena's USDe, which uses a new hybrid neutral mechanism and provides higher yields. Aave and Curve, the two largest DeFi lending protocols, have also released their own decentralized stablecoins crvUSD and GHO, which have innovated based on the CDP mechanism.
Although the total amount of stablecoins is lower than the peak in 2021, from the overall trend, this wave will definitely surpass the scale of the previous wave. Currently, stablecoins account for 8% of the market share, but there is no problem in the bull market to see 20%, so there is still 2-3 times the space in the overall volume of this bull market. Although this report praises ENA many times, there are still certain risks. We will continue to conduct in-depth research in the future. #稳定币 #内容挖矿
