Demand for Ethereum-based stablecoins exploded during the DeFi bubble in the third quarter: growth of more than 600% for Dai’s supply, 200% for USDC
The explosive third quarter of decentralised finance brought significant growth to Ethereum-compatible stablecoins (ETH).
According to crypto data aggregator Messari, MakerDAO’s Dai stablecoin offering grew 623% in Q3 2020, pushing the token value over $1 for four consecutive months.
With a market cap of nearly $130 million at the beginning of July, Dai’s offering today reached over $940 million.
Dai tokens are created when Ether owners deposit ETH in the MakerDAO protocol, allowing them to issue the stablecoin and use Ether as collateral. Being an ERC-20 token, Dai can be used on the Ethereum network to generate interest or yield through DeFi protocols.
Messari attributes much of Dai’s recent growth to the launch Bitcoin Future of four major liquidity mining programmes in decentralised finance, including a change to the Compound (COMP) yield distribution scheme with rewards in DAI on 30 June, the launch of Yearn Finance (YFI) farming on 18 July, the launch of Curve (CRV) on 13 August and the launch of yield farming for the Uniswap UNI token on 16 September.
DAI’s market cap from 1 January 2020
The DAI market cap from 1 January 2020. Source: Messari
Messari estimates that 65% of the total DAI offer is currently supplied to DeFi protocols for yield farming.
In the third quarter, Circle’s demand for USD Coin (USDC) also exploded, tripling the USDC market cap from $928 million on 1 July to $2.79 billion today. USDC is the second stablecoin to grow by more than $1 billion in a single quarter, after Tether (USDT).
Figures published by Flipside Crypto reported an increase in demand for USDC among DeFi users following the launch of Curves. Since the platform was launched, the USDC market cap has grown by 150%.
USDC market cap in the last 6 months
USDC market cap in the last 6 months. Source: Coin360
According to Messari, the overall capitalisation of the stablecoin sector added $8.2 billion in Q3, which is higher than the growth of the last four quarters combined. The company estimates that 75% of the $20 billion market cap in the sector was issued on Ethereum.
USDC has also entered into partnerships with network blockchain Solana (SOL), Stellar (XLM), Algorand (ALGO) and Flow (FLOW).