Stablecoins: A Rising Category Among Investors

Stablecoins are often seen as assets that could pose risks to the financial market, but they have become increasingly popular among investors, especially during challenging market conditions.

A recent on-chain report from QuickNode shows a significant surge in stablecoin activity across various blockchain networks.

Between the first and third quarters, stablecoins experienced a 45% growth in active addresses and a 41% increase in transactions. In contrast, decentralized finance (DeFi) saw a decline in daily active addresses and transactions, dropping from over 1 million daily average transactions in the first quarter to 786,000 in the third quarter.

Stablecoins Gain Appeal to Investors

It wasn’t until July that stablecoins established dominance in the market, surpassing the transaction volume of DeFi protocols on multiple blockchain networks, including ethereum, Arbitrum, Polygon, Optimism, and more. In the third quarter of 2023, stablecoins became the only category to experience growth, with over 400,000 daily active addresses.

“Stablecoins are the dominant player in terms of daily active users. They have even surpassed DeFi, which was traditionally the stronghold in previous years. Stablecoins’ stability and predictable value make them attractive to both new and experienced users,” the report shared.

USDT remains the leader in terms of market capitalization, active addresses, and transaction activity. In the third quarter, it had an average of 337,000 daily active addresses and 680,000 daily transactions.

While USDC maintains a lead over USDT in terms of volume, the analysis reveals that the gap has narrowed since the first quarter, largely due to Silicon Valley Bank’s collapse and USDC’s slight de-pegging of about $0.03. USDC experienced a significant volume decline of 62% from Q1 to Q3.

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Uniswap Excels in Q3

DeFi has faced challenges in 2023, but Uniswap stands out as the only decentralized exchange (DEX) that has maintained stability since the first quarter, even after the collapse of Silicon Valley Bank. Uniswap’s trading volume saw a significant increase, primarily driven by a few large-volume transactions rather than a surge in the number of transactions or active addresses.

Notably, Uniswap experienced a 15% growth in active addresses and a 33% increase in transaction count during the third quarter, deviating from the broader DeFi trend.

Although DEXs continue to dominate the DeFi subcategory, staking is gaining momentum as another interesting trend. In Q3, the total staked Ether increased from 23.7 million to 27.2 million, with 37% of this attributed to Liquid Staking, a concept similar to distributing IOU tokens in exchange for staked assets.

Lido DAO’s protocol, which allows users to deposit Ether and receive stETH tokens, saw a 16% increase in value from $7.6 billion to $8.8 billion by the end of Q3, holding 32% of the staked ETH.

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By Team