This article discusses all-around statistics measuring DAI stablecoin’s supply growth, liquidity, lending demand as well as price volatility. With data and charts aligned, we observe a pattern of DeFi users’ behaviors, incentivized by the financial system.
The DAI Supply Growth
The graph below shows how the supply of DAI tokens has grown since their introduction in December, 2017. The daily supply in circulation has grown to nearly 100 million! The highest daily number in circulation being 95,451,247 on March 19, 2019. The current daily supply of DAI tokens is hovering around 84 million.
The current top DAI holder is Compound which controls around 17.11% of the supply. The second biggest DAI holder is dYdX which controls 3.74%. Maker’s Eth2Dai ranks as 10th in the list.
Here is a table showing the top 10 DAI “whales” and their DAI holdings:
Utilization Across DeFi
The following graph shows the daily borrowed volume of various lending platforms for the last 6 months:
Note that the area chart above is not stacked. We can see MakerDAO as the blue area has been dominating all the time. They reached peaks of ~4.3 million DAI per day both in late June and mid September.
Compound migrated their protocols to version 2 in the beginning of May and here we are only quoting the Compound v2 protocols’ data. It shows that the orange area (Compound v2) has been sharing the 2nd place with the pink (dYdX) — interchangingly, they reached peak volume of around 3 million DAI per day.
We also notice that NUO Network (green) and bZx (red) played a role in the market. In the first quarter, NUO Network launched their new platform and gained lots of traffic rapidly. While bZx has been rising steadily since June.
This following graph compares monthly lending activity across the DeFi projects mentioned above. The growth in dYdX DAI lending percentage is encouraging over the last six months: by Oct 17, the data we collected indicates that the monthly total borrowed amount of DAI on dYdX has surpassed MakerDAO since August — in October, users on dYdX makes up almost half (~49.37%) of the DAI borrow demand across all the major lending platforms (so far by 17th).
Liquidity Across DEXs
The following graph shows the daily trading activity for several major decentralized exchanges. OasisDEX dominates by a large margin, which is the DEX platform derived from MakerDAO system. The next most active by monthly trading activity is Uniswap, followed by Kyber and then RadarRelay.
Note that we are not showing 0x name here as they serve as the underlying protocol for lots of relayer type of DEXs (e.g. RadarRelay, Paradex) and may duplicate the volume. Most of the traffic on 0x are carried by RadarRelay and they share a similar size.
Similarly for dYdX, who adopts OasisDex’s Eth2Dai market for swapping, thus to avoid inflation in the total volume numbers, we are showing their volume all under OasisDex’s name. The actual size of DAI trading volume on dYdX is between Uniswap and Kyber, which reached the peak in June at the monthly total of 17.9 million.
In general, based on trades of the DEXs mentioned above, DAI trading volume climbed up since the beginning of this year, to a monthly total of 90 million DAI in July, and went down by almost 50% afterwards.
Combing the statistics above altogether, we observed the self-governance lifecycle shown in DAI’s financial ecosystem. From the trend and correlation of the time series below, DAI tells how the price can stay stable from users’ incentivised behaviors:
“Dai manages supply and demand through economic incentives. When the price is above 1 USD, anyone can create Dai and sell it for more than it’s worth. This increases the supply and causes price to fall back to 1 USD.
Likewise, when the price of Dai is below 1 USD, users can pay off debt in the system at a cheaper rate, as they can buy Dai for below 1 USD but pay off debt at the fixed rate of 1 USD. The Dai used to pay off debt is burnt, reducing supply and increasing price.”
In early Feb, the price fluctuates slightly (1st & 2nd chart) first, and potentially caused the growth in borrow/lending volume (5th chart) in the next few days — on February 24, DeFi users borrowed 4.33 million DAI in a day, which caused the supply chart (3rd chart) turns into blue and accumulated to a total of 88.01 million supply on that day.
The increased supply amount subsequently brought a devaluation in the beginning of April, when we see a -6.54% price change, which could potentially result in the increase of trading volume (4th chart) and borrow volume (5th chart) — when price went down, borrowers and traders can pay less (in USD) to hold DAI.
It’s hard to infer causality between the variables here, as they always influence and guide each other interchangeably in an economic system. However, one conclusion to draw is that they are an in-phase vibration and highly correlated.
DAI Price Fluctuation — are stablecoins really stable?
So after we saw that DAI price can be affected largely by users’ behaviors, the question above may hover in people’s minds. We will apply beta analysis and compare DAI with multiple stablecoins to measure the risks.
Back to definition, stablecoins, such as DAI, are cryptocurrencies that attempt to maintain their value relative to other assets. Example stablecoins which attempt to maintain a value of $1.00 USD include DAI, TrueUSD, USDCoin, Tether, Gemini Dollar. Here is a plot of prices for several stablecoins for the last 12 months (Data is collected from CoinMarketCap):
As can be seen from the table below, their prices all have means near $1.00 USD, with DAI being the closest by mean. Their variances are also small with USDC having the smallest:
Above we also attached statistics for ETH and BTC as the major coin for comparison. The variance are normalized by N-1.
Unlike the rest of the cryptocurrency market, stablecoins should not be subject to dramatic price swings. One measure of the volatility in stablecoin prices is its beta value relative to major cryptocurrency markets such as those for Bitcoin and Ethereum. Here is a table of betas for several major stablecoins relative to Bitcoin and Ethereum:
A token will have a beta coefficient of 1 with itself. It serves as a threshold for risk measurement in practice of stock market analysis:
- When beta >1, it means the stock is more volatile than the market benchmark (usually SP500 index for stock market). It can also be interpreted as sensitive to the market changes. For example, when the market fluctuates, the stock will be influenced largely and bring higher yield, as well as higher risk;
- When beta =1, they have the same level of volatility;
- When 0<beta <1, the stock is less likely affected by the market trend.
Usually stocks are positively correlated with the market, i.e. the beta coefficient are usually positive values. However, there are also cases when the value is negative, where stock’s price will go up when the market is at fall.
For the 5 stablecoins above, we see that all of them have absolute values smaller than 0.1, which means they are all much more stable than ETH and BTC, and are unlikely to be affected by the cryptocurrency market trend. In appendix, we also attached a table of beta coefficients for other top coins, for comparison.
Among them, USDC and TUSD have the smallest values and show a negative correlation with ETH and BTC, this indicates that they serve as “storage” tokens to avoid risks when the market is unstable: when ETH/BTC market is going up, users are likely to sell TUSD/USDC to enter the market; when the market is at fall, users may swap their holdings for TUSD/USDC for asset preservation.
More from Alethio
Alethio’s DeFi dashboards now are refreshed and enriched with more protocols and metrics. We aim to grow the list continuously to serve as a unified data platform — contact us if your DeFi product wants to be included!
Disclaimer: Alethio has no preference or prejudice towards any of the projects mentioned above. The range of protocols discussed is limited and we will keep working on adding more in the list to achieve a more holistic view. Alethio has a strong commitment to staying neutral by providing facts and best judgments based on objective and/or verified information. This article should never be used as a guide for any malicious practice or trading suggestion.
Top Coins’ Beta Coefficients based on 60-day-window in 2017