Who'swinningthestablecoinwarsin2023?

Stablecoins are one of the true killer apps of crypto so far. They’re an irreplaceable part of the modern DeFi ecosystem, facilitating billions of dollars of financial activity daily.

As such a crucial lynchpin, it’s important to keep a sharp eye on stablecoin trends.

In this article, we’re going to examine three significant trends in stablecoin adoption and usage which emerged over the past 12 months - and explore their potential implications for the future.

W e’ll use Dune data to pull out useful insights into the key drivers behind these trends - and offer our predictions on how they may impact the DeFi landscape in 2023 and beyond.

Let's begin with an overview of stablecoins on the Ethereum network.

Stablecoins have been around since “ancient history” in crypto terms - with market leader Tether ($USDT) launching as early as 2014.

It wasn’t until 2020 though that stablecoins on the Ethereum network really began to pick up steam.

Once they did though, it was an epic rise - with their combined market cap soaring from $3.1 billion Jan ‘20 to over $124 billion by March ‘22.

As the stablecoin market has expanded, so did the different kinds of stablecoins available for users.

We can broadly categorize stablecoins into three main groups: centralized, decentralized, and algorithmic.

• Centralized stablecoinsCentralized stablecoinsCentralized stablecoins - typically fiat collateralized off-chain and are usually connected to third-party custodians like banks. Some of the top examples of centralized stablecoins are Tether (USDT) and Coinbase (USDC).
• Decentralized stablecoinsDecentralized stablecoinsDecentralized stablecoins - such as MakerDAO's DAI, are over-collateralized transparently on-chain and are not controlled by any centralized authority.
• Algorithmic stablecoinsAlgorithmic stablecoinsAlgorithmic stablecoins - including UST, FRAX, and MIM, are collateralized by other crypto assets and rely on algorithms to manage the supply and demand of the token to maintain the peg.
• Curve lost ~800 million or -80% DAI (from 1 billion to 200 million)
• Uniswap ~100 million DAI (from 400 million to 300 million)
• Sushiswap ~5-6 million DAI (from 40 million to 34 million)
• Circle's $USDC grew from $4 billion to $37 billion
• Tether’s $USDT grew from a $13 billion to $39 billion

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Coming into 2022, $USDT was still in poll position.

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As the new year dawned though, things changed. For the first time the total supply of $USDC on Ethereum surpassed $USDT.

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https://dune.com/embeds/1218750/2087061

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The new king of centralized stables, $USDC, peaked at $47 Billion coins issued in March.

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In the following months though, the overall market cap of centralized stables declined. The majority of issuers, including Tether, reduced issuance.

Circle, on the other hand, tried to maintain issuance in the 40-45 billion range.

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