Fri, September 20, 2024 at 09:15

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I want to discuss the current state of stablecoins in 2024, based on a recent report from CoinGecko.

  • 
• Annie

  • Hi, Kang-hoon!

  • That sounds interesting.😊 What does the report say about the market cap of stablecoins?

  
• 

  Kang-hoon

  • The report states that fiat-backed stablecoins reached a market cap of $161.2 billion in 2024.

  • However, this is still below their 2021 peak of $181.7 billion.

• Annie

  • Oh, I see.

  • So, they haven't fully recovered yet.

  • What about commodity-backed stablecoins?

  
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• 

  Kang-hoon

  • Commodity-backed stablecoins have grown by 18.1% in 2024, reaching $1.3 billion.

  • However, they still represent only 0.8% of the fiat-backed stablecoin market.

• Annie

  • That's quite a small portion.

  • Are there any dominant players in the stablecoin market?

  
• 

  Kang-hoon

  • Yes, the market is heavily dominated by Tether (USDT), USD Coin (USDC), and Dai (DAI), which control 94% of the market.

  • USDT alone takes up 70.9%.

• Annie

  • Wow, that's a huge dominance by just a few players.

  • How many people are actually holding these stablecoins?

  
• 

  Kang-hoon

  • According to the report, there are 8.7 million addresses holding stablecoins.

  • Among them, USDT, USDC, and DAI account for 97.1% of the total.

• Annie

  • That's a lot of holders!

  • Do stablecoins maintain their $1 peg well?

  
• 

  Kang-hoon

  • Stablecoins often struggle to maintain their $1 peg, especially during uncertain times.

  • Established ones like USDT, USDC, and DAI are better at it, but they still face challenges.

• Annie

  • Interesting.

  • What about newer stablecoins?

  • Are they more stable?

  
• 

  Kang-hoon

  • Newer, partially algorithmic stablecoins like USDD, DAI, and FRAX can be more unstable.

  • They rely on market trading to stay pegged and have faced issues during market turbulence.

• Annie

  • That sounds risky.

  • Have any stablecoins failed to maintain their peg?

  
• 

  Kang-hoon

  • Yes, some like Iron Finance and Basis Cash have failed to maintain their peg.

  • This highlights the ongoing challenges in the stablecoin market.

• Annie

  • Given all these issues, do you think stablecoins are a good investment?

  
• 

  Kang-hoon

  • Considering the volatility and the dominance of a few players, I would say stablecoins present more risks than benefits at this point.

  • 

  • They are not a favorable investment in the current market conditions.

• Annie

  • Thanks for the insight, Kang-hoon.

  • So, overall, would you say this news is good or bad for the market?

  
• 

  Kang-hoon

  • I would categorize this as bad news.

  • The inability to maintain pegs and the dominance of a few players indicate instability and risk, which are not favorable for the market.

• Annie

  • Got it.

  • Thanks for explaining everything so clearly.😊

  
• 

  Kang-hoon

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.