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A Look at Stablecoins and Other On-Chain Derivatives

By Kyle Waters and Matías Andrade

Crypto market participants continue to recalibrate following the abrupt shocks emanating from FTX’s woes. As we have covered in recent editions of State of the Network, the on-chain footprint of Alameda’s wallets stretched long and far across many crypto assets and blockchains. As a result, the impacts are vast and evolving. We believe one area of particular interest is stablecoins.

Stablecoins are digital tokens issued on public blockchains that track an underlying asset, today, overwhelmingly the US Dollar. In the most popular fiat-backed model, issuers like USD Coin’s Circle hold reserves backing the tokens redeemable for the underlying dollar.

Stablecoins came under serious scrutiny earlier this year after the vicious spiraling of the ‘algorithmic’ stablecoin Terra USD, but have continued to be a significant area of development in the digital assets industry. How has the stablecoin ecosystem held up in the wake of FTX’s collapse?

Adoption

One simple measure of adoption is value transferred on-chain. Using a relatively longer window of a 90-day moving average, daily value exchanged on blockchains with stablecoins is near all-time highs of $25B per day. About $20B of this is sourced from USDC (on Ethereum) and Tether (Ethereum and Tron) transfers.

It’s also worth considering the role stablecoins played in permitting users to withdraw funds from exchanges to reduce their counterparty risk exposure. We can note that addresses holding an excess of $10,000 denominated in various stablecoins has increased in the last few months; USDC, in particular, has seen a significant increase since the beginning of November, from 76K to 86K addresses.