2020 has been a prominent year for the growth of decentralized finance (DeFi), with so much coverage on adoption appearing in the cryptocurrency news circuit this year. As a matter of fact, by the third quarter of 2020, several in the community were intensely focused on the development of this space. But while decentralized finance had bagged the majority share of the ecosystem’s focus, the crypto market’s stablecoins have indicated substantial development on the charts too. In particular – Tether.
Tether – The Most Significant Stablecoin
Moreover, in the past ten months, stablecoins’ value in circulation has increased from $5.7 billion to $22 billion, with the third quarter of 2020 seeing a ~120% increase in contributions – from $10 billion in May to around $22 billion in October. As anticipated, Tether (USDT) has been the market’s most significant stablecoin, with its supply six times bigger than USDC, the next best regulated concurrently.
As per a report by Joel John, it is evident that the market’s attitude towards digital assets like stablecoins has evolved from speculation to utility. Why? Well, a large share of the market already trades with Tether, instead of Bitcoin. Since stablcoins are turning into the usual currency for traders to trade against, it may have assisted in decreasing the unpredictability the Bitcoin market exhibits. Tether is also being adopted in crypto derivatives now.
Furthermore, the improving rate of stablecoin transactions has also been testing its limits, with every month observing over ~8 million transactions. While high Ethereum (ETH) transaction charges have played a part in this development, Tether and USDC have been operating in the direction of achieving solutions for this issue.
Surprisingly, the stablecoins ecosystem still hasn’t progressed so much on the Ethereum blockchain. This is proven by the third quarter of 2020, its growth rate observed increasing trend of only 20%, as compared to around ~100% in the second quarter.
Tether has been the ruling stablecoin for some time now, with its 2020 dominance hovering at a whoppoing 80%, even greater than the rather impressive 75% from 2019.
The year has seen stablecoins, particularly Tether, operating on other layers already (such as TRC-20 and BEP2), in order to work around Ethereum’s high fees challenges while simultaneously easing congestion. However, the functioning of Tether and other stablecoins will further rely upon how the market progresses for DeFi, as seen in the better half of 2020.