Ethereum dominates stablecoin liquidity with a staggering 52.59% share

Ethereum still dominates the stablecoin market, despite hype for minting tokens on other chains. The chain has 52.59% of the stablecoin supply, in addition to the most active usage based on smart contract data.

The Ethereum chain is still important for stablecoin supply and turnover. Despite the hype for new mints on TRON and Solana, Ethereum’s supply is still not replaceable. The chain carries 52.59% of the total stablecoin supply, with a mix of USDT, USDC, and multiple algorithmic stablecoins.

Ethereum’s dominance happens at a time when the overall stablecoin supply is at an all-time high. A total of $174.7B in value is locked in stablecoins, with the bulk concentrated with USDT and USDC, as well as DAI, currently being swapped for USDS. USDT alone has a supply of more than 129B, accrued after the past days of active daily inflows and new mints.

To underscore the importance of Ethereum’s version of USDT, recently Tether moved $2B in tokens, burning them on less active chains to boost exchange reserves of the ERC-20 version. The increased usage of stablecoins on Ethereum is tied to the current peak CEX activity, especially the concentration of liquidity and volumes on Binance. The ERC-20 version of USDT has a turnover of 114% of its supply each day, rising higher during the busiest trading days.

Ethereum sees highly active usage of USDT, with activity spikes in November. | Source: Artemis

Additionally, Ethereum carries more than 27B USDC, with over 2.4M holders. USDC remains a key addition to USDT liquidity, due to the token’s more transparent reserves. USDC is also replacing stablecoins in the Euro area, due to stricter requirements for cash reserves.

The ERC-20 version of USDT is the oldest and most widely adopted stablecoin, with the biggest selection of trading pairs. The primacy means tokens from other networks cannot easily displace the asset. The ERC-20 version is also needed to bridge to Arbitrum, Optimism, Base, and other chains that contain highly active apps.

Stablecoin liquidity remains siloed, with a big part locked into the TRON ecosystem. However, Ethereum’s L1 stablecoin transfers are at the heart of crypto activity.

Tether remains the top smart contract

Tether is usually among the top 3 smart contracts on Ethereum, barring day-to-day activity fluctuations. The stablecoin burns more than 6% of all gas on Ethereum, producing more than $285K in daily gas fees. Separately, the Tether protocol sees $13.37M in daily fees, based on data from DeFi Llama.

USDT has a marked weekly pattern of transfers, with the busiest times during mid-week rallies, and lower activity on weekends. In the past three months, transfers have ranged between $5B daily to above $48B daily.

While ERC-20 USDT can carry small-scale transactions, the stablecoin was used for high-value transfers of $1.2B on average.

Despite being the most widely traded stablecoin, ERC-20 USDT is not the most active on-chain. Other networks have a higher transfer rate, as well as more senders and receivers. The Ethereum stablecoin version is more widely used for transfers between protocols and smart contract settlements.

The biggest user of ERC-20 USDT is still Binance, followed by OKX. The actual trading does not happen on-chain, leading to a lower overall sender and receiver count.

The bulk of high-speed payments for USDT happen on TRON, and Solana is a hotspot for USDC activity. Ethereum carries both USDT and USDC, though with a different transaction profile, focusing on liquidity and secure transfers. Ethereum’s stablecoin supply is also key to its DeFi sector. The chain locks in more than $59B in various protocols. At the same time, the stablecoin supply on Ethereum is estimated at $97.18B. USDT is often used in liquidity pairs, as well as in lending protocols. USDT has also been used as collateral to issue other types of stablecoins.

The Ethereum version of USDT has 6,378,609 holders, while on TRON more than 53M wallets hold the token. TRON is also the chain where USDT is used for payments, with a strong section of transactions between $10-100K.

The presence of stablecoins on Ethereum has not helped the ETH market price. ETH remains suppressed, trading under $3,100 while Bitcoin (BTC) continues to trade near its all-time peak above $94,000.

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