Coinbase claims that global market uncertainty creates demand for stablecoins. Chain transfer activity and market capitalization of stablecoins continue to grow. The blog post defines two major stablecoin use cases. The first is to be a safe haven on days of general volatility. And the second is to allow fast cross-exchange payments.
Coinbase analyst Mike Co says stablecoins are on the rise. Global trade may soon demand a stable currency economy to intervene. He points to the JPMorgan pilot project called JP JPM Currency ’. People who develop JPM are confident that instant cross-border payments on a blockchain will improve institutions.
Daily active addresses for Stablecoins and DeFi are constantly increasing
According to the analyst, the increase in daily active addresses means that stablecoins get more adoption. The charts show that USDT is the leader. It has more than 50,000 active daily addresses on average. While Sai, USDC, Dai and Pax USD have up to 3,000 of them each. TrueUSD has around 1,000 such addresses. And Gemini Dollar, BUSD, and HUSD share the latest positions with less than 100 addresses per day.
The study presents the new iteration of the crypto game called ‘DeFi’. The decentralized finance sector makes sure you can lend, borrow, or use stablecoins as collateral. Such actions are possible through things like Compound, Nuo, dYdX, and Aave. Working through smart contracts, they offer an APY range of 0.44-2.36% for USDC:
USDC transferred daily value, increasing market capitalization
According to the Coinbase trading platform, USDC demand is growing among clients. USDC is one of the two stable coins supported by Coinbase.
Over the past three months, economic activity and USDC usage slowly gained more from adoption. It had a usage increase of up to 20% on days like January 14, 2020. The percentage shows the USDC's share in the total volume of daily transactions on the platform.
Coinbase Commerce has a transaction volume worth more than $ 200 million so far.
Over the past two years, the value of stablecoin systems has increased. Stable currencies are in use in over 40% of all cryptocurrency transactions:
The use of the Ethereum blockchain is decreasing. While it appears that Bitcoin is holding most of it, it is not growing towards eating the parts of Ethereum and most of the Stablecoins. But don't forget that many of the stablecoins including Tether work on the ETH blockchain.
As of March 1, USDC's market capitalization has increased from $ 457 million to more than $ 700 million. The USDC's daily chain transfer value is more than $ 400 million. After the start of the stable coin, it has transferred over $ 26 billion. Interestingly, the daily transfer value also grows for many other stablecoins.
Markets demand a safe haven in difficult times of the global crisis. Investors sell their shares to buy gold, silver, food, and cryptocurrencies. If your local currency can lose 5-20% of the value in a month, the dollar also seems to be a good alternative.
Even the developed parts of the world search for dollars. In a piece ‘The World Desperate for Dollars‘ by Chong Koh Ping and Serena Ng of The Wall Street Journal, the authors write about how countries buy the dollar in 2020 as a hedge asset. The DXY index measures the US dollar against the euro, the pound and the yen. It made a sharp increase in late March 2020:
Stablecoins allow instant, cross-border transactions without KYC. When you create a cryptocurrency wallet, it takes minutes. When you create a bank account, it can take hours. Stablecoins could be one of the keys to global adoption of cryptocurrencies. However, the cryptocurrency market is not heavily regulated today.
The Coinbase analyst piece features a quote from the Bank for International Settlements (BIS). The Bank claims that stable retail currencies could serve as a global business door:
“In principle, stable retail currencies could allow for a wide range of payments and serve as a gateway to other financial services. By doing so, they could replicate the role of transaction accounts, which are a springboard for broader financial inclusion. ”