This Week In Stablecoins — Five Highlights From 9/26/20

As stablecoins continue their march to $1 trillion market cap, here are the this week’s top five stories:

1. Stablecoins Pass $20 Billion In Market Cap

Torrid growth in stablecoins, driven by crypto trading, has seen demand accelerate even further by the rise of yield farming, as farmers collect governance token rewards for lending and borrowing assets.

Though Tether continues to dominate, it’s share of total stablecoin market cap has fallen in 2020 (from 82.2% to 77.6%) as Tether’s rapid growth was eclipsed by USDC and DAI, as the latter’s use is more prevalent in yield farming.

2. The Office Of The Controller Of the Currency Issues Mixed Clarifications On Stablecoins

On September 21st, the Office of the Controller of the Currency issued a letter clarifying their views on stablecoins. The most positive part of the statement was that “ … national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law, including those relating to the BSA and anti-money laundering”. That clarification paves the way for banks to receive deposits from stablecoin issuers, including deposits that constitute reserves for a stablecoin.

The less positive part of the letter was the statement that they are “… not presently addressing the authority to support stablecoin transactions involving un-hosted wallets,” which are described as “… where an individual owner of a cryptocurrency maintains control of the cryptographic keys for accessing the underlying cryptocurrency”. So banks can only be involved in transactions for wallets which they custody.

3. USDC Passes ETH As The Largest Collateral Type On MakerDAO

It took 21 months for USDC to add it’s first billion in market cap. It took 72 days to add it’s second billion. And USDC is tracking to add it’s third billion in just 22 days, driven by demand in DeFi. Given ETH was the sole collateral used for almost two years, USDCs emergence as the leading collateral used on MakerDAO is surprising to most.

4. Defi’s Continues It’s Stablecoin Surge As Curve Passes Huobi As The 3rd Largest Exchange Holding Stablecoins

The top two decentralized exchanges now hold for more than $1 billion in stablecoin value!

5. After Torrid Growth in Korea With The Korean Won Pegged Stablecoin TerraKRW, Terra Announces Terra USD

While there are new stablecoins announced every week (e.g. OUSD), the TerraUSD launch is of particular interest for three reasons.

First, is the upcoming launch of Anchor, a savings protocol offering stable yield on Terra stablecoins that is powered by block rewards via transaction fees and inflation,. This will lead to a steadier APR, uncorrelated to market sentiment.

Second, Terra’s soon to be released cross chain bridging protocol, Dropship, will allow Terra stablecoins to migrate from the Terra mainnet to other blockchains, starting with Ethereum and Solana.

But the most unique thing about Terra is Chai, it’s e-wallet in Korea, with more than two million active users and $1.2B in annualized transaction volume after just 16 months since launching. Chai is integrated with the leading e-commerce merchants in Korea, and expanding offline in 2020 through the Chai debit card and offline integrations like CU, Korea’s largest convenience store chain.

We’re excited to host Terra as our featured guest on “Stablecoins Are Killing It,” Episode #18, on October 8th. You can register here.

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