The demand for this coin grew manifold with 370% year-over-year growth
The cryptocurrency industry grew significantly in 2021. Despite several headwinds, its total market cap grew by 187.5% in 2021. However, it’s interesting to note that stablecoins overtook all other types of coins. It “continues growing faster than the rest of the crypto market,” according to Arcane Research’s latest report.
Total stablecoin supply across protocols is closing in on $200 billion from $29 billion at the start of 2021, with current levels around $180 billion, the report noted. This is after the supply grew a whopping 388% in 2021, The Block had previously found.
In its report, The Block had further highlighted that demand for the asset class also grew in tandem with its supply throughout the year. Annual stablecoin adjusted transaction volume crossed $5 trillion in 2021. This was an over 370% year-over-year growth.
While the cryptocurrency class has found “product-market fit and broader institutional acceptance”, its growth can also be attributed to the surge in DeFi and derivatives trading during this time. Both markets make use of stablecoins to transact between different cryptocurrencies or withdraw funds in order to avoid price volatility since most stablecoins are pegged to dollars or other fiat currencies.
Surprisingly, USDC’s growth over the past year was recorded to be the fastest at 20%, which could be seen continuing well into 2022. In fact, Circle, the firm behind USDC, is even planning to go public through a SPAC later this year. After signing a new acquisition agreement last week, the company is hoping for a valuation of $9 billion if the deal goes through.
On the other hand, the biggest stablecoin USDT had a relatively bumpy year which saw its growth stagnating to the point that it grew a mere 1% in 2022, Arcane noted in its research. Several factors have contributed to this downfall, including repeated objection from regulators in the country over its stability along with allegations that it had insufficient cash reserves in the event of large sell offs.
However, the company published a new report on 23 February revealing the assets currently backing its USDT stablecoin, while claiming that the company’s $78 billion in USDT stablecoins is backed by dollar equivalents.
Nevertheless, Arcane has predicted that at current growth rates that both stablecoins have been following in 2022, USDC will overtake USDT by the end of June this year.
In fact, on 23 February, it was announced by Terra that it had raised $1 billion as part of its emergency Bitcoin reserves in order to maintain UST’s stability. The reserve aims to maintain a 1:1 peg between the stablecoin and the U.S dollar, the company noted.
1/ The long awaited [REDACTED] ?3 is here!
— Terra (UST) ? Powered by LUNA ? (@terra_money) February 22, 2022