The "stability" and "instability" of stablecoins in 2024
The market value of fiat-backed stablecoins soared to $16.12 billion in 2024, but still fell short of the peak of $18.17 billion in 2021.Author: CoinGecko
Compiled by: Baihua Blockchain
Stablecoins are a type of token that anchors their value to other assets (such as commodities or fiat currencies) to stabilize their price. By being pegged to specific fiat currencies, assets, or commodities, most stablecoins serve as a bridge between real-world assets and cryptocurrencies, mapping these assets onto the blockchain in token form.
Since 2014, companies like Tether and Circle have issued tokenized currencies backed by real-world financial assets (such as bank deposits and short-term notes). Users can directly enter the cryptocurrency space through these companies, converting real-world deposits into newly minted stablecoins. Conversely, they can also redeem stablecoins back into fiat currency.
However, not all stablecoins are fully backed by tangible real-world assets. Decentralized stablecoins, such as DAI and AMPL, maintain their peg through mechanisms like over-collateralization of crypto assets or supply adjustments (rebasing), allowing for the minting of stablecoins without a centralized entity while maintaining their peg.
The true value of stablecoins lies in their ability to maintain their peg at all times (even during market volatility). Unfortunately, many stablecoins have failed this test. In this report, we cover the types of stablecoins, total market capitalization, trading volumes, and emerging stablecoin models.
Five key points from CoinGecko's 2024 "State of Stablecoins Report":
The market capitalization of fiat-backed stablecoins skyrocketed to $16.12 billion in 2024, but still below the peak of $18.17 billion in 2021
Although the fiat-backed stablecoin market experienced growth in 2024, reaching a total market capitalization of $16.12 billion, this figure still falls short of the historical high of $18.17 billion in 2021.
Commodity-backed stablecoins grew by 18.1% in 2024, reaching $1.3 billion, which is only 0.8% of the fiat-backed stablecoin market. While commodity-backed stablecoins have seen growth, their scale remains relatively small, with a market capitalization of only $1.3 billion in 2024, accounting for 0.8% of the total market capitalization of fiat-backed stablecoins.
Stablecoins account for 8.2% of the total market capitalization of the global crypto market, with an increase in dominance during market downturns
Stablecoins hold an 8.2% share of the global crypto market, particularly increasing their market dominance during periods of market weakness.
8.7 million addresses hold stablecoins, with 97.1% holding USDT, USDC, or DAI. Most stablecoin holders are concentrated in USDT, USDC, and DAI, with approximately 97.1% of addresses holding these three types of stablecoins.
Stablecoins still face challenges in maintaining peg stability, especially during uncertain times. Although stablecoins are designed to maintain their pegged price, many face challenges in stability during market turmoil and uncertainty.
Since 2020, the total market capitalization of the top ten fiat-pegged stablecoins has significantly increased. During the bull market from 2020 to 2021, the market capitalization surged by 3121.7% from $5 billion at the beginning of 2020 to $18.17 billion by March 2022. Following the collapse of Terra and its UST stablecoin, the market capitalization of stablecoins temporarily declined, but reversed in November 2023. As of August 2024, the total market capitalization of fiat-pegged stablecoins has grown by 35.4%, increasing from $11.91 billion to $16.12 billion.
The top three dollar stablecoins—Tether (USDT) with a market capitalization of $11.44 billion, USDC with $3.33 billion, and Dai (DAI) with $530 million—account for 94% of the total stablecoin market capitalization. Meanwhile, USDT's market share has solidified at 70.3%, while USDC's market share has continued to decline since the U.S. banking crisis in March 2023. Stablecoins pegged to other currencies (such as the euro, yen, and Singapore dollar) account for only 0.2% of the market share.
1. Commodity-backed stablecoins grew by 18.1% in 2024, reaching $1.3 billion, only 0.8% of fiat-backed stablecoins
As of August 1, 2024, the market capitalization of commodity-backed stablecoins reached $1.3 billion. Despite new entrants like Kinesis and VeraOne, Tether Gold (XAUT) and PAX Gold (PAXG) still account for 78% of this market capitalization. Although commodity-backed stablecoins have grown 212 times since 2020 and increased by 18.1% in 2024, they only represent 0.8% of the market capitalization of fiat-backed stablecoins.
Precious metals are the preferred backing for these stablecoins, but in recent years, other commodity-backed stablecoins have also been launched. The Uranium308 project introduced a stablecoin pegged to the price of U308 uranium compound per pound, but the project has since ceased operations.
2. Stablecoins account for 8.2% of the total market capitalization of the global crypto market, with an increase in dominance during market downturns
As of August 1, 2024, stablecoins account for 8.2% of the total market capitalization of the global crypto market. At the beginning of 2020, stablecoins had a very small share in the crypto industry, accounting for only about 2% of the total global market capitalization, but peaked at 6% during the early rise of DeFi.
The dominance of stablecoins surged from November 2021 to May 2022, primarily due to the exponential growth of Terra's UST stablecoin, which saw its market share rise from 4.8% to 15.6%. However, following the collapse of UST, the market share of stablecoins sharply declined, only to rapidly rebound in the subsequent bear market as investors sought stability, reaching a peak of 18.4%.
3. Stablecoins account for 8.2% of the total market capitalization of the global crypto market, with an increase in dominance during market downturns
As of August 1, 2024, stablecoins account for 8.2% of the total market capitalization of the global crypto market. At the beginning of 2020, stablecoins had a very small share in the crypto industry, accounting for only about 2% of the total global market capitalization, but peaked at 6% during the early DeFi boom.
The dominance of stablecoins significantly increased from November 2021 to May 2022, primarily due to the rapid growth of Terra's UST stablecoin, which saw its market share rise from 4.8% to 15.6%. However, after the collapse of UST, the market share of stablecoins sharply declined, but as investors sought stability in the subsequent bear market, the market share soared again to a peak of 18.4%.
4. 8.7 million addresses hold stablecoins, with 97.1% holding USDT, USDC, or DAI
The top ten stablecoins have a total of 8.7 million holding addresses, with the top three stablecoins—USDT, USDC, and DAI—accounting for 97.1% of the holding addresses.
USDT has the most holding addresses, with over 5.8 million wallets, 2.6 times more than its closest competitor, USDC. The remaining eight stablecoins each have fewer than 1 million holding addresses, with DAI held by just over 505,000 wallets.
These stablecoins experienced rapid growth in 2020, but after the collapse of Terra in 2022, growth slowed significantly due to concerns about the solvency of other stablecoins.
5. Stablecoins still face difficulties in maintaining the stability of their pegged prices, especially during periods of market uncertainty
In the past, stablecoins struggled to maintain their pegged prices during periods of volatility. However, mature stablecoins like USDT, USDC, and DAI are now better able to maintain their peg to the dollar. Stablecoins often experience de-pegging during market volatility, such as during the banking crisis in March 2023, due to uncertainty regarding the safety of deposits at Silvergate and Signature banks.
Newer stablecoins, especially some algorithmically supported ones like USDD, DAI, and FRAX, exhibit greater volatility and rely on market arbitrage to maintain their peg. However, there have also been several failed cases, such as Iron Finance and Basis Cash, which were unable to successfully maintain their pegged prices.
