- What are Stablecoins?
- Here, we will delve into the state of stablecoins over time.
- Coingecko State of Stablecoins Report:
- Conclusion
The current Coingecko State of Stablecoins 2024 report shows that fiat-backed stablecoins with $161.2B Markets capitalization are still below 2021’s peak of $181.7B.
What are Stablecoins?
Stablecoins are crypto tokens whose value is pegged or attached to real-world assets like fiat currencies or commodities to stabilize and maintain their peg price.
Maintaining their pegs to assets, fiat currencies, or commodities helps most stablecoins bridge the gap between real-world assets and crypto.
Firms like Circle and Tether have issued currencies tokenized and backed by real-world financial assets such as bank deposits and short-term notes since 2014.
Decentralized stablecoins such as DAI and AMPL maintain their stability via mechanisms like over-collateralization of crypto assets or rebasing while also maintaining their peg without using a centralized approach. This explains that not all stablecoins are fully backed by real-world assets.
Here, we will delve into the state of stablecoins over time.
Coingecko State of Stablecoins Report:
- Fiat-Backed Stablecoins
They grew to $161.2B Market Cap in 2024, still below 2021’s peak of $181.7B. They also had explosive growth during the 2020-2021 crypto bull market, growing from $5.0B at the start of 2020 to $181.7B in March 2022. USDT, USDC, and DAI, the top three stablecoins, dominate the market, accounting for 94% of the total market cap.
- Commodity-Backed Stablecoins
They make up just 0.8% of Fiat-Backed Stablecoins, growing by 18.1% in 2024 to reach $1.3B. Tokens backed by commodities like gold saw a significant increase of 18.1% in 2024, with Gold (XAUT) and PAX Gold (PAXG) leading the way.
However, they still represent a small fraction—about 0.8%—of the total fiat-backed stablecoins. Recently, other commodities, such as uranium, have also been used to back tokens.
- Stablecoins comprise 8.2% of the global crypto market capitalization:
As of August 2024, stablecoins represent 8.2% of the global cryptocurrency market cap. This dominance tends to rise during periods of market uncertainty, as investors seek to preserve stability in their portfolios. For example, after the Terra collapse, the stablecoin market initially shrank but then surged by 18.2% during the subsequent bear market.
- 97.1% of the 8.7 million wallet addresses holding stablecoins hold USDT, USDC, or DAI
Out of the 8.7 million wallet addresses holding stablecoins, 97.1% hold USDT, USDC, or DAI. USDT is the most widely held, with approximately 5.8 million wallets holding it, while smaller user bases exist for other stablecoins like DAI, which is held by around 505,000 wallets.
- Stablecoins still struggle to maintain their pegs during periods of extreme market volatility
During times of market uncertainty, stablecoins have often struggled to maintain their stability. For example, USDT, USDC, and DAI faced pressure during the banking crisis of 2023. Newer, partially algorithmic pegged tokens like FRAX and USDD depend on market forces to hold their pegs, which can make them more volatile. Stablecoins like Iron Finance and Basis Cash have even failed completely.
Conclusion
Despite the hype around the stability of stablecoins, they still have real-time inadequacies. However, this does not overshadow the fact that stablecoins have contributed immensely to the growth and adoption of cryptocurre
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