Stablecoin Supply Reaches Record High, Boosting Liquidity of the Crypto Industry

The supply of stablecoins – tokens designed to stay pegged to the value of another asset, typically the U.S. dollar – reached a record high on Tuesday, boosting the liquidity of the crypto industry.

The total supply of stablecoins, a type of cryptocurrency designed to maintain a peg to the value of another asset, typically the U.S. dollar, hit a new all-time high on Tuesday, continuing to bolster the liquidity of the crypto market.

Specifically, the market cap of stablecoins has increased by roughly $10 billion since Election Day, rising from $164.8 billion to $174.7 billion at press time, according to data from blockchain analyticsArtemis.

This marks a 6% increase in the period.

The supply of stablecoin on various blockchains since 2017. (Artemis)

“Stablecoins are one of the few aspects of the onchain economy that have indisputable product market fit. They are globally accessible, transactions are instantaneous, and they offer lower fees for their usage than you see in TradFi,” wrote Alexander Cutler, a core contributor of decentralized exchange Aerodrome, in a Telegram message.

“When you offer a better product, adoption is just a matter of time.”

Cutler also noted that stablecoins allow holders to engage in various onchain activities, such as lending, providing liquidity and positioning themselves for potential market rallies in the future.

“The great thing about stables is that there is so much composability,” Cutler added.

Competitors are entering the ring with their own stablecoin offerings.

Tether, the provider of USDT, is largely responsible for the growth in the stablecoin supply, as the amount of USDT circulating has increased by $7.6 billion since Nov. 5. This new all-time high for stablecoin supply comes as Ripple is preparing to launch its stablecoin for enterprise use cases such as payments, and Binance announced its new product BFUSD, a reward-bearing margin asset for its futures trading users.

According to an X post from the team behind Binance Futures early Tuesday, the “rewards will be funded by delta-hedging spot and futures positions to receiving funding fee income, as well as rewards from staking.”

Binance’s BFUSD reward mechanism is reminiscent of the synthetic dollar USDe, the flagship product of Ethena, which has seen massive growth. With Binance Labs as an investor, Ethena Labs, the software firm behind USDe, has seen the market cap of its token, which is designed to stay pegged to the U.S. dollar, increase to $668 million since Election Day, up from about $2.8 billion to roughly $3.5 billion at press time.

Despite the rise in stablecoin supply, Aerodrome’s Cutler argues that the increase in the amount of stablecoins is just beginning.

“Their growth has just begun as it seems clear that their use on blockchains have the ability to disrupt traditional payment networks,” Cutler said. “In particular, the rails now exist to deliver superior FX experiences to consumers and instructions, a market opportunity that can be valued in trillions.”