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Crypto Stablecoin Report 06: The latest 13 additional issuances of USDT all occurred on Tron, driving the increase use of Tron

Original link: https://bihu.com/article/1237936014

Original publish time: June 23, 2020

Original author: HaiBo Jiang, researcher of MYKEY Lab

We released MYKEY Crypto Stablecoin Report to share our interpretation of the development status of stablecoins and analysis of their development trends to help the participants in the crypto market stay updated on the development status of stablecoin. The MYKEY Crypto Stablecoin Report will be published every week, looking forward to maintaining communication with the industry and exploring the development prospects of stablecoin together.

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  • Last week, Tether continued to additionally issue 200 million USDT on Tron.
  • The market capitalization of USDC increased by $94.93 million.
  • The supply and borrowing of USDT on Compound increased significantly. On June 20, USDT deposits reached $247 million, borrowings were $147 million, and the annualized interest rate of borrowing was 14.87%.
  • The latest 13 additional issuances of USDT all occurred on Tron, totaling $1.48 billion.
  • In the past two years, USDT has only been additional issued twice on Omni, totaling $550 million.
  • Since the beginning of May, the number of daily transactions of TRC20 USDT has increased by 124%, and the number of daily transactions on Tron has increased by 15.5%.

1. Overview of Stablecoin Data

First, let’s review the changes in the basic information of the various stablecoins in the past week(June 12, 2020, ~ June 18, 2020, same below).

Source: MYKEY, Coinmetrics

At present, the market circulation of major stablecoins is approximately $11.547 billion, and the market capitalization continues to grow.

Source: MYKEY, Coinmetrics

In the past week, the market capitalization of stablecoins has increased by approximately $264 million. Among them, Tether has made 2 additional issuances on Tron, totaling about 200 million USDT. The circulation of PAX and TUSD increased by $810,000 and $10,000, the circulation of BUSD, HUSD, DAI, and GUSD decreased by $16.41 million, $1.11 million, $14.46 million, and $70,000. The growth of the market capitalization of stablecoins mainly comes from USDT and USDC, and the growth of USDT comes from Trc20 USDT. According to our observation, since May 8 this year, the 13 additional issuances of USDT have all occurred on Tron, totaling $1.48 billion.

Source: MYKEY, DeBank

Last week, the number of stablecoin holding addresses on Ethereum decreased, mainly because the number of holding addresses of USDT decreased more.

Source: MYKEY, DeBank

The decrease in the number of holding addresses came from USDT, which decreased by 14,078, and the number of holding addresses of PAX, USDC, DAI, and TUSD increased by 5,083, 4,359, 1,659, and 493.

Source: MYKEY, Coinmetrics

As the number of active addresses of stablecoins hit a historical record on June 7, the total number of active addresses of stablecoins decreased by about 14% last week.

Source: MYKEY, Coinmetrics

Last week, the number of daily transactions of main stablecoins decreased slightly.

Source: MYKEY, Coinmetrics

Source: MYKEY, Coinmetrics

Last week, the daily volume of transactions of major stablecoins maintained the recent trading level, and the proportion of the daily volume of transactions of each stablecoin did not show a trend change.

2. The Development History and the Migration of Public Blockchain of USDT

In the 2nd Stablecoin Report, we saw a large number of additional issuance of USDT on Tron. Now, there is evidence that this situation is intensifying. Over the past month or more, the additional issuance of USDT has all occurred on Tron. In this report, we hope to review and summarize the development of USDT on various public blockchains and analyze the reasons behind it to better judge the future development trend.

Although USDT is controversial because of the lack of collateral behind it, it still cannot change investors’ demand for USDT. On Compound, the lending rate of USDT is 17.31%, while ZRX with the second-highest lending rate is 2.82%, and USDC with the third lending rate is only 2.66%.

First, we make a summary of the assets and liabilities of Tether to initially observe all the tokens issued by Tether and the reserves behind it. Tether not only issues USDT anchored in USD but also EURT, CNHT, and XAUT anchored in Euro, RMB, and gold. According to Tether’s own published data, Tether’s liabilities include $9.631 billion USDT, €40 million EURT, ¥23.53 million CNHT, and 50,000 ounces of gold XAUT. Based on the current gold price of $1,743/oz, the market capitalization of XAUT exceeds that of EURT and CNHT, second only to that of USDT. The assets behind USDT are $9.778 billion, which is $147 million more than its liabilities. The assets behind EURT, CNHT, and XAUT are almost equal to their liabilities. Tether said that all issued tokens have a 100% margin.

Source: MYKEY, Tether

At present, the market capitalization of stablecoins is about $11.5 billion, of which the market capitalization of USDT is nearly $10 billion, accounting for 86.2%. USDT is circulated on Omni, ETH, Tron, EOS, Liquid, and Algorand, and the corresponding market capitalization is $1.197 billion, $5.668 billion, $2.734 billion, $5.251 million, $16.56 million, and $1 million. Next, let’s look back the development of USDT on various public blockchains.

Tether was founded in 2014. In the beginning, USDT was issued and transferred using the Omni protocol. Omni (formerly known as Mastercoin) is a digital currency and a communication protocol based on Bitcoin. It was officially launched on July 31, 2013, and also has its own token OMNI. In February 2014, OMNI was the seventh-largest cryptocurrency in the world. At present, Coinmarketcap shows that the market capitalization of OMNI is only $1.07 million, ranking 945.

The Omni protocol is implemented by tracking the lock script starting with OP_RETURN in transactions on Bitcoin. The transfer of USDT and other tokens is fees for paying the transfer in bitcoin. However, for the convenience of users, Exchanges generally charge USDT directly to users and convert it into bitcoin to pay to miners. Therefore, there is no substantial connection between the transfer of Omni USDT and the OMNI token itself.

At the end of 2017, Tether issued USDT based on the ERC-20 protocol on Ethereum. With the increase of transfer fees on Bitcoin and the increase of Ethereum Dapp, ease of use finally defeated the ultimate pursuit of security, and the number of ERC20 USDT gradually exceeded Omni USDT.

The last issuance of USDT on Omni occurred on April 14, 2019. Since then, the circulation of USDT on Omni has been decreasing, and the previous issuance of USDT on Omni was June 25, 2018. In the past two years, USDT has only been additional issued twice on Omni, totaling $550 million.

The situation on Ethereum is the opposite of that on Omni. Before April 8, 2019, USDT was issued on Ethereum four times, with a circulation of about $60 million. Subsequently, USDT began to be additionally issued intensively on Ethereum.

Source: MYKEY, Coinmetrics

On October 29, 2019, the circulation of ERC20 USDT exceeded that of Omni USDT for the first time, with a circulation of $2.02 billion and $1.78 billion, and we call this the first public blockchain migration of USDT, which is the pursuit of the practicality of USDT. At present, the circulation of USDT on Omni, ETH, and Tron is $1.34 billion, $5.74 billion, and $2.88 billion.

Low transfer fees are probably the biggest advantage of the TRC20 USDT. As with geographic congestion, when fees are getting higher and higher, some features of USDT are transferred to other public blockchains, and Tether chose Tron. Tron further reduces the degree of decentralization based on Ethereum, improves scalability, and provides inexpensive USDT transfer services. The most noteworthy is that the recent additional issuances of USDT have all occurred on Tron.

Source: MYKEY, Tether

EOS itself is not niche, with many fans and users, but the threshold of use is too high and the degree of decentralization is questionable. RAM, CPU, NET, and storage are involved on EOS, and their consumptions annoy some users when registering. Besides, MEMO (remarks) is required when transferring EOS USDT, which is very inconvenient to operate. Therefore, although there are many users and transactions on EOS, the circulation of USDT on EOS is only $5.25 million.

Liquid is a bitcoin side blockchain designed by Blockstream to satisfy large and private transactions, and the number of transactions and account balances on Liquid will be hidden. The circulation of Liquid USDT is $16.56 million, of which $15 million was transferred from Ethereum to Liquid by Tether through cross-chain swap transaction on January 7, 2020. Since Liquid USDT is aimed at large customers like Exchanges and OTC, the number of transactions is not large.

In March of this year, Tether issued 1 million USDT on Algorand. At present, the circulation of USDT on Algorand is still only $1 million, which has not increased in these 3 months. Algorand can better solve the problem of balance between decentralization, scalability, and security. USDT issued on it can be regarded as an exploration of the next generation of public blockchain applications, but users and the number of transactions on Algorand are small, and there is not much demand for USDT.

3. Learning from History to Insight into Future Trends

We refer to the event that the additional issuance of ERC20 USDT exceeds Omni USDT as the first public blockchain transfer of USDT. TRC20 USDT now has been issued in large numbers and become the only USDT version to be issued in more than a month. This feature is the same as when ERC20 USDT replaced Omni USDT. The second public blockchain migration of USDT may be taking place. The performance of the additional issuance of ERC20 USDT exceeds Omni USDT during this time may provide some help for the current analysis.

The additional issuance of USDT will increase the value carried by the public blockchain, and more people may use the public blockchain. The transactions on the blockchain will become more frequent, and the number of DAPP users on the blockchain may increase. In theory, this situation should increase the value of the public blockchain and lead to a certain degree of price increase for the native token. Compared with the DeFi project, the price of governance tokens rose sharply as the mortgage assets rose.

Since April 2019, USDT has been additionally issued on Ethereum in large quantities and exceeded the circulation on Omni in October. During this period, Ethereum performed like other altcoins, and ETH/BTC showed a clear downward trend (but ETH/BTC fell less than TRX/BTC). At present, only TRC20 USDT is being issued, which has lasted for more than a month. Similarly, TRX/BTC has not risen significantly, and TRX/ETH is almost at a historical low. Therefore, the additional issuance of USDT may not necessarily increase the price of native tokens on the public blockchain.

Source: MYKEY, Coinmarketcap

According to the current trend, USDT on Tron may exceed that on Ethereum. We observe that when USDT began to be additionally issued in a large number on Ethereum, the growth of its circulation on Omni fell into stagnation and continued to decline, and the circulation of USDT on Ethereum exceeded that on Omni eventually. Similarly, USDT on Tron has increased significantly, while the USDT on Ethereum has not increased in more than a month. Based on historical experience, if this situation is regarded as a change in the issuance trend, USDT on Tron may exceed that on Ethereum.

However, the additional issuance of USDT on Tron is not the same as that on Ethereum last year. The advantage of USDT on Omni is to provide the highest security. In most transfers and transactions, Ethereum can already provide sufficient security, and Omni USDT can be almost completely replaced. Taking an Exchange as an example, $5 fees is required to withdraw Omni USDT, while only $1 fees is required to withdraw ERC20 USDT, and some Exchanges even closed the recharge and withdrawal of Omni USDT last year.

Many Exchanges charge no fees for USDT withdrawals and lower fees for on-chain transfers on Tron. Due to the congestion of Ethereum and the increase in transaction fees, the use of USDT does have sufficient reasons to transfer to Tron, for example in many small payment and transfer scenarios. However, the USDT on Ethereum still has a large gap, and it is not seen that other public blockchains can replace DeFi applications on Ethereum. Even if USDT on Ethereum ceases to be additionally issued, the circulation of ERC20 USDT has no basis for the decline. If USDT on Tron can exceed that on Ethereum in the end, it is more likely because of the large number of additional issuance on Tron.

Since the beginning of May, the number of daily transactions of USDT on Tron has increased by 124%, with the number of daily transactions of USDT on Ethereum has increased by 34%, while the number of daily transactions of USDT on Bitcoin remained essentially unchanged. This is different from what we observed in the 2nd Stablecoin Report. As USDT on Tron continues to be increased, the number of daily transactions of USDT on Tron has increased significantly. The additional issuance of TRC20 USDT can indeed drive the use of Tron. During the same period, the number of daily transactions on Ethereum has increased by 5.6%, while the number of daily transactions on Tron has increased by 15.5%.

Source: MYKEY, Coinmetrics

This is what we’re sharing in this MYKEY Crypto Stablecoin Report, welcome to stay tuned for follow-up crypto stablecoin reports. We will provide more interpretations of the development status of stablecoins and analysis of their development trends to help you stay updated on the development status of stablecoin in the follow-up report.

PS: MYKEY Lab has the final right to interpret the content of the article, please indicate the source for the quotation. Welcome to follow our official account — MYKEY Lab: MYKEY Smart Wallet.

Past review

MYKEY Crypto Stablecoin Report 01: USDT continues to gain momentum as market capitalization exceeding $10 billion

MYKEY Crypto Stablecoin Report 02: USDT suspended additional issuance and the usage scenario of USDT in Tron is single

MYKEY Crypto Stablecoin Report 03: Where are the users of DAI?

Crypto Stablecoin Report 04: Tether additional issued 300 million USDT, commenting on various decentralized stablecoins

Crypto Stablecoin Report 05: DAI Maintains Steady Growth, Exploring Use of DAI by Users of Centralized Exchanges

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