Stablecoins demand has been occasioned by the current global economic uncertainty claims Coinbase, a crypto exchange. There has been a surge in stablecoins on-chain transaction activity. The analysis identifies two areas that display the demand.
The Coinbase analyst Mike Co has singled out two reasons for the surge: the asset class is a safe haven when the market volatility goes wild and they are facilitating quick payments between crypto exchanges.
The analyst project that the global economy might be heading in the stablecoins direction. He singles out the JPM coin projects saying that the coin adopters know the coin is a surefire cross border payment asset. This is ideal in wooing institutional investors to onboard the crypto economy.
Stablecoins and DeFi daily active addresses
Stablecoins demand reflected on active addresses
Logically growth on daily active addresses means increased demand for the coins. The chart shows USDT leads the pack with over 50,000 active addresses daily. Most of the coins have a daily average of around 3,000 active addresses.
The study includes the DeFi sector which is the market place for lenders and borrowers. This is becoming quite popular given that it allows users to use stablecoins as collateral. These platforms use the Smart Contract protocol.
The study shows that the Coinbase Commerce platform has registered significant growth in USDC which the crypto exchange supports. However, the last three months show increased activity around USDC with 20 percent growth in adoption.
However, it is gloom for the Ethereum ecosystem which is experiencing reduced usage while Bitcoin is holding on to its strongholds without affecting the Ethereum and stablecoins market share. It is worth noting that Tether stablecoin rides on the Ethereum blockchain.
Daily on-chain transactions
The USDC MCap has grown from $457 million USD to more than $700 million USD since the beginning of March. Historical transfers stand at $26 billion USD and the growth cuts across other stablecoin projects in the market.
Stablecoins demand response to need for crypto safe haven
Crypto is risky and a safe haven is always welcome especially in crisis situations which explain the increased stablecoins demand. Stablecoins appear to be the current safe haven amid the COVID-19 pandemic. Stablecoins are the current preferred cross border transaction vehicles because it does not require Know Your Customer (KYC) processes; transactions are real-time.
According to the Bank of International Settlement (BIS), stablecoins are the future of global businesses:
In principle, retail stablecoins could enable a wide range of payments and serve as a gateway to other financial services. In doing so, they could replicate the role of transaction accounts, which are a stepping stone to broader financial inclusion.