US Dollar Stablecoin Supply Surges to Near All-Time High Amidst Market Expansion

The total supply of U.S. dollar-pegged stablecoins is approaching its previous all-time high as new token issuances increase competition in the market. Reaching $165 billion, the supply has surged due to the rising market capitalization of Ethena's USDe stablecoin. The market, currently dominated by USDT (with 70% market share) and USDC, is expanding with the launch of new stablecoins from Ethena, PayPal, and Ripple, indicating potential growth in the sector.

Surge in US Dollar-Pegged Stablecoins Nears Previous All-Time High Amidst Market Expansion

The total supply of stablecoins pegged to the US dollar has witnessed a significant increase, approaching its previous all-time high. This surge is attributed to the proliferation of new token issuances that have intensified competition within the stablecoin market.

As of the latter part of last week, the total supply of USD-pegged stablecoins had reached $165 billion, marking the highest token level observed in nearly two years, as per The Block Data Dashboard. The burgeoning supply of stablecoins has been driven in part by the escalating market capitalization of Ethena's "synthetic dollar" or USDe stablecoin, which has recently stabilized around $2.4 billion.

This latest surge in supply on Thursday, amounting to $165 billion, represented the highest supply level since late June 2022, as indicated by The Block Data Dashboard. The previous all-time high for supply stood at over $180 billion.

Growing Market Share and Diversification

The USD-pegged stablecoin market, which has long been dominated by Tether's USDT and Circle's USDC, is experiencing growth in both total supply and the number of options available. USDT maintains a commanding market share of approximately 70%, according to data from DeFiLlama.

In addition to Ethena's recent stablecoin launch over two months ago, PayPal, headquartered in Silicon Valley, introduced its own stablecoin in collaboration with Paxos in August 2023. Earlier this month, Ripple announced its intention to issue a USD-pegged stablecoin later in the year.

At the time of its announcement, Ripple projected a rapid expansion of the stablecoin market in the coming years, forecasting a potential market size of $2.8 trillion by 2028.