Analysis of the Stablecoin Market After the USDC Crisis: Fiat Stablecoins Remain Trustworthy, DEX Volume Soars

Recently, the collapse of a cooperative bank has triggered a liquidity crisis for the USDC stablecoin. Data shows that the price of USDC fell to a low of 0.8788 USD on March 11, with a daily drop of over 12%. This depegging event not only affected USDC but also impacted other stablecoins that use USDC as collateral, such as DAI and FRAX.

Although the crisis of USDC was resolved on March 13, this event still brought many changes and reflections to the stablecoin market. By analyzing the basic situation and market data of stablecoins (March 11-18), we found the following points worth noting:

1. The average market value of fiat stablecoins has risen across the board, while the average market value of crypto asset-based stablecoins has declined across the board. This indicates that the market's confidence in fiat stablecoins remains relatively strong, whereas crypto asset-based stablecoins are more negatively impacted.

2. Currently, the market capitalization of USDC is about 47% of USDT, which is less than half. The market capitalization of TUSD has increased by over 54%, the largest increase. The market capitalizations of USDT, DAI, LUSD, USDP, GUSD, FLEXUSD, USDD, and others have also grown.

3. As of March 18, the exchange's stablecoin supply was approximately 21.461 billion USD, down 11.02% from the 11th, indicating a rapid outflow of funds.

4. The total locked value of 13 major stablecoins in Uniswap v3, Curve, and AAVE v2 decreased from 3.464 billion USD on the 11th to 3.297 billion USD on the 18th, a decline of approximately 4.83%.

5. On March 11, the total trading volume of stablecoin trading pairs in the DEX reached 23.17 billion USD, far exceeding the average daily volume of around 1 billion USD at the beginning of the month. The trading between the three stablecoins USDC, USDT, and DAI constituted the main flow path of stablecoins in DeFi during the crisis, reflecting users' confidence in fiat stablecoins.

TUSD market value surges, USDC crisis affects other stablecoins

The decoupling of USDC has led to significant fluctuations in its market value as well as the market values of other stablecoins. From the market value changes on March 11, it can be seen that major stablecoins are showing a trend of more declines than increases. The market value of USDC fell by 2.5%, while SUSD, DOLA, MAI, and USTC experienced even larger declines, ranging from 2.8% to 5.0%. In contrast, the market values of nine other stablecoins increased, with USDP showing the largest gain, exceeding 11%.

As of March 18, the market value changes of most stablecoins continued the trend of the past 11 days. TUSD's market value increased the most significantly, by over 54%, while USDT also rose by more than 6%. Meanwhile, the market values of USDC, BUSD, MIM, SUSD, DOLA, USDX, and ALUSD continued to decline, with MIM experiencing the largest drop of over 17% and USDC falling by more than 14%.

From the perspective of average market capitalization changes of different types of stablecoins, fiat stablecoins have shown relatively stable performance, while crypto-asset-based stablecoins have been more negatively affected. Algorithmic stablecoins, on the other hand, have demonstrated a certain degree of resilience; although their market capitalization dropped at the beginning of the crisis, it has rebounded somewhat in the later stages.

USDC market cap shrinks, fiat stablecoins still dominate

There are currently over 100 types of stablecoins in the market, with a total market capitalization of approximately 133.88 billion USD. USDT remains the largest stablecoin by market capitalization, at about 76.74 billion USD, followed by USDC, with a market capitalization of about 36.03 billion USD. Together, they account for 85% of the total market capitalization of stablecoins. After this crisis, the current market capitalization of USDC is approximately 47% of that of USDT.

In addition to USDT and USDC, stablecoins with a market capitalization exceeding 1 billion USD also include BUSD, DAI, TUSD, and FRAX. In terms of type, fiat stablecoins have the highest market capitalization, but the largest number among high market capitalization stablecoins are those backed by crypto asset collateral.

It is worth noting that besides Ethereum, other public chains have also seen the emergence of stablecoins with large market capitalizations. For example, Tron has become the main chain for USDT, and it is also the main chain for TUSD, USDD, and USDJ. Public chains like Optimism, Polygon, and Kava also have stablecoins with significant market capitalizations, which has positive implications for the DeFi development of various public chains.

The supply of stablecoins on exchanges is decreasing, and purchasing power is weakening.

On March 18, the exchange's stablecoin supply was approximately USD 21.461 billion, down 11.02% from March 11, indicating a rapid outflow of funds. Interestingly, on the 11th, the exchange's stablecoin supply increased by 3.49% compared to the 10th, possibly related to users exchanging stablecoins on the exchange for hedging purposes.

The Stablecoin Supply Ratio (SSR) shows that as of March 18, the SSR is approximately 4, an increase of 30% compared to March 11. This is related to the recent rebound in Bitcoin prices, while the market capitalization of stablecoins has declined overall due to de-pegging crises, leading to an increase in the SSR and a decrease in actual purchasing power. This brings more uncertainty for the market's return to a bull market.

DEX volume surges, lending market rates return to normal

During the crisis, the total trading volume of stablecoin pairs on DEX surged. On March 11, the total trading volume of stablecoin pairs reached $23.17 billion, far exceeding the average daily volume of around $1 billion at the beginning of the month. The trading between USDC, USDT, and DAI constituted the main liquidity path for stablecoins in DeFi during the crisis.

The de-pegging of USDC has had a significant impact on the lending market's deposit and borrowing interest rates. The deposit and borrowing interest rates of USDC and DAI show a "V" shape, while the rates of USDT, TUSD, GUSD, LUSD, and SUSD show a "Λ" shape. Currently, the deposit and borrowing interest rates in the lending market have all returned to the levels at the beginning of the month.

Overall, stablecoins serve as an important bridge between the crypto world and fiat, and the parts that are more closely connected to the real world are more likely to become vulnerabilities in the system. However, because of this, the ability of these stablecoins to resist risks may be stronger than assets that are purely established in the crypto world. Centralized management can respond to risks more effectively, which is also the reason why users maintain confidence in regulated fiat stablecoins, as well as the reason why stablecoins are receiving increasing attention from regulatory authorities.