According to statistics as of Friday, May 13, the top-performing stablecoins by market cap are currently worth $163.7 billion after estimating the stablecoin economy at nearly $200 billion just last week. Of course, the Terrausd Climatic Outage (UST) wiped billions out of the stablecoin economy, and Binance’s stablecoin BUSD has recently entered the top ten crypto market cap positions. Just as there was carnage in the crypto economy, the recent demise of Terra has caused a major shift within the stablecoin ecosystem.
The great shift in the stablecoin economy
It was only a week ago that the stablecoin economy was awfully close to surpassing the $200 billion mark, but Terra’s recent collapse has changed all that. Terra’s once stable token Terrausd (UST) was once the third largest stablecoin in existence until it lost its $1 parity. The token, which was supposed to be pegged to the value of a US dollar, is now trading for under $0.20 per unit. Still, the market valuation makes it the sixth largest market cap in coinecko.com’s “Stablecoins by Market Capitalization” list.
Last month, none of the stablecoin projects in the top ten stablecoins by market valuation saw growth. USDC fell 0% over the past 30 days while all other top stablecoins posted 30-day declines. BUSD is the third largest stablecoin token today with a market cap of $17.3 billion, and BUSD has also entered the top ten crypto coins by market cap, ranking ninth out of more than 13,000 coins.
Makerdao’s DAI token is the fourth largest stablecoin market cap at $6 billion today. Makerdao’s native token MKR has surged in value by 15% over the past 24 hours, absorbing some of the UST’s aftermath. In fact, most stablecoins that managed to remain stable reaped the benefits of the UST crash.
While some see the need for a “further regulatory framework” for fiat-pegged coins, others believe a decentralized stablecoin is still needed
On May 12, 2022, Jeremy Allaire, CEO of Circle Financial tweeted: “USDC/USDT is the trade of the day. Escape to Quality.” Appearing on CNBC’s Squawk Box, the Circle executive noted that there needed to be “more regulatory frameworks for stablecoins.” A number of people have been watching the development of so-called decentralized and algorithmic stablecoins very closely since the demise of Terra.
Despite the recent Terra UST carnage, many still believe there is a great need for decentralized and algorithmic stablecoins among the centralized giants. Founder of Avalanche (AVAX). Emin Gun Sirer believes that the crypto ecosystem needs a decentralized stablecoin.
A day before LUNA, Gün Sirer went under a US penny called: “Even fully collateralized fiat stablecoins have unpegged. Even some of the weak [algorithmic] Stablecoins have recovered.” The AVAX founder too specified that he “always said that [algorithmic] Stables face destabilizing bank runs.” Despite the bank run risk, Gün Sirer stated that a decentralized stablecoin is still needed in the industry.
“We need a decentralized stablecoin,” explained Gün Sirer. “Fiat-backed stables are subject to legal confiscation and imprisonment. A decentralized economy needs a decentralized stablecoin whose backing store cannot be frozen or confiscated.”
What are your thoughts on the stablecoin Economy Shuffle this week? Let us know what you think about this topic in the comment section below.
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