ON–186: Stablecoins Mega Issue 💰💥

Category Analysis Plus Coverage on crvUSD, DAI, GHO, and USDT.

Sep 29, 2023

ON–186: Stablecoins Mega Issue 💰💥

About the editor: Spencer Noon is an independent crypto investor. Looking to get in touch? DM him on Telegram or reply to this email and say hi 👋

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Stablecoins 💰

📈 Tron ($590B) surpasses Ethereum ($478B) in single directional stablecoin volume in August

  • On-chain stablecoin volume has remained steady for the past 6 months, with Tether remaining dominant with $822B in (single directional) volume in August, with USDC remaining in 2nd place with $292B in volume, and DAI being a distant third at $23B. Note: Single Directional Volume is an approach to reduce the double-counting observed when used "total_volume". This approach constructs a graph of transfers between each address involved in a transaction and uses the largest amount transferred from/to a wallet as the volume for that transaction.
Source: Allium
  • In the month of August, USDT did 1.1B transactions with USDC at a distant second with 79M transactions. The data suggests a much smaller average transaction size on USDT versus USDC, reflective of the different regions each stablecoin serves.
Source: Allium
  • Stablecoin usage on Tron ($590B) continues to have strong (single directional) volume when measured against Ethereum ($478B).
Source: Allium

② Curve Finance 🌈

📈 crvUSD maintains $115M supply, provides 25%+ of Curve profits

  • After launching in May 2023, crvUSD supply has grown to >$100M, maintaining a steady supply of ~$115M through September. crvUSD is minted against crypto collateral and uses an AMM to manage collateral composition, enabling gradual "soft" liquidation and de-liquidation as prices change. wstETH remains the most used collateral (55M crvUSD), followed by wBTC (35M), sfrxETH (11M), wETH (5M), and tBTC (2M). crvUSD continues to hold a tight peg against USD, deviating <$0.001 over 55% of the time.
Source: curvemonitor.com; CoinGecko API; Curve Research
  • crvUSD fees have become a significant source of revenue for Curve Finance. crvUSD borrowers pay a variable rate for the duration of their loan, averaging 3-5% annualized. Over the last 4 weeks, crvUSD fees have accounted for 25.6% of Curve DAO's total revenue ($328k of $1.227M).
Source: curvemonitor.com
  • In addition to AMM-based collateral management and dynamic interest rates, crvUSD uses multiple "peg keepers" to stabilize its value. Peg keepers mint or burn crvUSD to stabilize its price versus other stablecoins. By doing so, peg keepers also earn revenue for the DAO, currently totalling ~$77k.
Source: Curve Research

💦🔬 Tx-Level Alpha: Here, a user deposits 132.8 wBTC (~$3.6M) to borrow 1.7m crvUSD, adding to their 700k crvUSD borrow, collateralized by 796 wstETH ($~1.5M). These large positions have soft liquidation ranges of $13.5k-15k (wBTC) and $928-1k, minimizing the risk of even the most vicious spikes down.

③ MakerDAO 💫

📈 Dai supply reverses decline and crosses back over 5B

  • Over the past couple of years, the Dai supply has been largely falling. In August 2023, it fell to ~4.4B. It has since grown to ~5.5B. This turnaround coincided perfectly with the change to the Enhanced Dai Savings Rate (ESDR). The EDSR resulted in a savings rate of ~8% on the newly launched Spark Protocol. The rate has since equalized back down to ~5%. MKR price increased 25% in the same time frame. Simultaneously, the Dai surplus fell 22% to the intended buffer of 50m Dai.
Source: makerburn.com
  • Dai in the DSR increased by ~1.3B (380%) since August 2023. The initial spike coincided with the 8% EDSR rate increase and a small dip of ~360M Dai (24%) occurred around the reduction to a 5% EDSR rate. This means that ~30% of all Dai are currently in the DSR.
Source: makerburn.com
  • Out of the ~5.5B Dai supply, ~3.1B (56%) are minted against Real World Asset vaults. The top 3 RWA vaults are Monetalis at 1.25B (generating 4% fees), BlockTower (4.5%) at ~1.28B, and Coinbase Custody (3%) at 500M. 121M of Maker's 195M projected annualized profit comes from RWA vaults.
Source: makerburn.com

④ Aave GHO 👻

📈 GHO stablecoin sits at $22M in supply

  • Since July 16th, the GHO stablecoin—which is pegged to the US dollar—experienced a notable uptick in its supply, reaching its peak of over 23M at the end of August. As of September 28th, the supply has slightly pulled back to 22M. During this time frame, a total of 55.4M GHO tokens have been minted, while 32.6M tokens have been burned. The current 22M supply represents a fraction of Aave's Total Value Locked (TVL) of $4.62B. This disparity not only emphasizes the fluctuating nature of GHO's supply but also underscores its potential for growth within the broader financial landscape.
Source: Flipside Crypto - @jackguy
  • Among 541 GHO token holders, 483 possess less than 2.5k tokens, while 25 command over 100k. The average holder's stake is 42.1k GHO, but the median sits at 22 GHO. This breakdown reveals a diverse distribution pattern in the GHO small community of holders.
Source: Flipside Crypto - @jackguy
  • Since August, GHO token's swap activity has seen a decline, dropping from 1M-3M daily to a current 200k - 1.5M. Interestingly, daily swappers range between 20 and 60, indicating that a limited group handles this substantial volume, highlighting concentrated trading activity.
Source: Flipside Crypto - @jackguy

💦🔬 Tx-Level Alpha: In this transaction, the stablecoin GHO is minted within Aave when borrowed against collateral. With the minting, the borrower receives a debt token. To settle this, the GHO is returned to Aave, allowing collateral retrieval. However, if the collateral's value significantly drops compared to the borrowed amount, it risks liquidation. This system upholds GHO’s peg, as collateral in Aave consistently backs the GHO supply.

⑤ Tether 🍐

📈 Tether’s market cap up +22% in the last year

  • 2023 has been tough year for crypto, yet USDT is thriving with a market cap of $83.28B, which is up +22% in the last year and represents 66% of the stablecoin market share.
Source: Messari.io (powered by DefiLlama)
  • The number of wallets holding USDT on Tron increased 94% YTD, from 15.65m to 30.35m; on Ethereum, the number of wallets increased 60% YTD. USDT monetary base hit ATH earlier this year.
  • Approximately 45B USDT held by leading CEXs. Over 40B USDT sits non-crypto platforms, suggesting mass market adoption is driving demand for USDT.

💦🔬 Tx-Level Alpha: Tron is the chain of choice for mass market usage. 48.9% of all USDt-Tron is held outside of the top 500 accounts, showing increasing widespread distribution of USDT.