Stablecoin supply saw the largest quarterly contraction in history in Q2
Total stablecoin supply shrank to $ 151.3 billion in the second quarter of 2022, down 18.8%, or $ 35.1 billion, from the first quarter. report According to Arcane Research.
This is the largest quarterly supply decline in Stablecoin’s history, the report said.
However, a study investigating the 13 largest stablecoins showed that stablecoin supply increased steadily in the first four months of 2022. However, the 50% annual growth rate from January to April was slower than the 500% annual growth rate in the last five months. The 2021 report states.
According to the report, the decline in stablecoin supply was due to the collapse of TerraUSD (UST), which wiped out $ 18 billion from the stablecoin market in a few weeks.
Between May 16th and July 1st, the total supply of stablecoins decreased by 5.4%, or 35.8% per year. Arcane Research said this was the first time a sustained negative supply growth had been seen.
The supply of Tether (USDT), the largest stablecoin by market capitalization, fell by more than 15% as market capitalization fell from $ 78.4 billion to $ 66.3 billion in the first half of 2022.
According to Arcane Research, the decline in USDT supply may be due to USDT’s loss of dollar pegs due to the collapse of Terra in May. In addition, Tether saw an increase in redemption demands as the market became fed up with Stablecoin in the aftermath of Terra.
If supply growth continues at the same pace, USDCoin (USDC) will abolish USDT as the largest stablecoin on October 10, the report said.
In addition, research shows that the market capitalization of algorithmic stablecoins plummeted 77.4% from $ 13.3 billion to $ 3 billion in the first half of 2022. The collapse of USTC, which evaporated $ 9.7 billion, was responsible for about 94.2% of the reduction in market capitalization. ..
As a result, the algorithm’s market advantage for stablecoin fell from 8% to 2% in the first half of 2022, the report said. Arcane Research said this paved the way for a 11.9% increase in the market share of fiat-backed stablecoin, led by USDC and BinanceUSD (BUSD).
