The adoption of stablecoins, the digital asset most commonly pegged to the US dollar, is spreading as more users and institutional investors see the benefits of these tokens.

In post In a blog post, Coin Metrics researchers Kyle Waters and Nate Maddrey analyzed recent on-chain trends in stablecoin performance, with the combined market cap of all stablecoins surpassing $150 billion on Monday.

Total value paid in stablecoins year after year | Source: Coin Metrics

In January 2022 alone, over $500 billion was paid in stablecoins. In 2021, the total stablecoin conversion volume only surpassed $500 billion in mid-February, and in 2020, it will take up to 10 months for the total stablecoin settlement value to surpass $500 billion. Looking back, the total value paid in stablecoins has doubled in 2022 compared to all of 2019.

The overall stablecoin supply has increased significantly

According to the report, the main reason stablecoins handle so much throughput in the economy is that their overall supply has increased significantly. Total stablecoin supply is now over $150 billion, a new record that is in stark contrast to 2020.

The largest stablecoins by total supply are mostly issued and supported by third parties. These include USD Coin (USDC), BUSD issued by Binance, and Tether USDT, which together account for more than 90% of the total stablecoin supply. Among these stablecoins, USDT is still the market leader with a market cap of almost $78 billion; USDC ranks second with a market cap of over $51 billion.

Total supply of stablecoins | Source: Coin Metrics

The Coin Metrics report points to some notable trends: USDC recently had a $44 billion oversupply on the Ethereum blockchain, making it the largest stablecoin on Ethereum. USDT’s market share is around 50% across the three networks where the token is issued; and DAI’s decentralized stablecoin supply appears to be shifting to sidechains and Layer 2 networks on Ethereum, which via bridges help move assets between different blockchains.

BUSD and HUSD dominate their respective exchanges

Looking at the average daily stablecoin movement volume, Binance’s BUSD and Huobi’s HUSD are leaders as they are exchange-issued coins that are mainly used to facilitate trading on exchanges. Since the stablecoin with the lowest volume of movement is Tether on Tron, there are different on-chain operating models of Tether on Ethereum. On Tether on Tron, the average movement volume is around $250, while over 30% of settlements and movements are under $100.

Compared to USDT on Ethereum, the average settlement and migration size on the smart contract platform is $1,600 and less than 10% of movements are worth less than $100. Most transactions using USDT on Ethereum are in the $1,000 to $10,000 range. and 1% of all transactions are over $1 million.

At the same time, data from analyst Santiment shows that Tether addresses with more than USD 1 million are on the rise again in the last 3 weeks, owning at least 80% of the supply of USDT. In general, stablecoin addresses with large holdings that increase their purchasing power bode well for the long-term future of cryptocurrencies.

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