Crypto Stablecoin Report 11: The circulation of stablecoins has overall increased, Holding AMPL a month for 51 times incomes
Original link: https://bihu.com/article/1603983018
Original publish time: July 28, 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, the total market capitalization of the major stablecoins increased by $465 million to $12.684 billion.
- The circulation of USDT was additionally issued $120 million on ETH and TRON after suspended for more than 20 days last week.
- The circulation of TUSD increased by 106 million and the circulation of DAI increased by 77.54 million. The circulation of TUSD and DAI has increased by 79% and 37% compared to a week ago.
- The proportion of the volume of transactions of DAI increased, while the proportion of the volume of transactions of USDT decreased.
- From June 23 to July 23, the circulation of AMPL increased from 5.61 million to 150 million, the price increased from $1.01 to $1.98, and the circulating market capitalization increased from $5.67 million to $296 million.
- From June 23 to July 23, the income of holding AMPL was 51.28 times, but the price of AMPL has only doubled.
1. Overview of Stablecoin Data
First, let’s review the changes in the basic information of the various stablecoins in the past week(July 18, 2020, ~ July 24, 2020, same below).
Market Circulation
Source: MYKEY, CoinMarketCap, Coin Metrics
At present, the market circulation of major stablecoins is approximately $12.684 billion, and the market capitalization continues to grow.
Source: MYKEY, Coin Metrics
In the past week, the circulation of major stablecoins has overall increased and the total market capitalization has increased by $465 million. The circulation of USDT was suspended for more than 20 days and was additionally issued $120 million on ETH and TRON last week. The circulation of TUSD increased by 106 million, the circulation of DAI increased by 77.54 million, and the circulation of USDC, PAX, BUSD, HUSD, and GUSD increased by 2.65 million, 14.58 million, 6.08 million, 17.13 million, and 190,000. The circulation of TUSD and DAI has increased by 79% and 37% compared to a week ago.
The Number of Holding Addresses
Source: MYKEY, DeBank
Last week, the number of main stablecoin holding addresses on Ethereum all increased and increased by 63,485.
Source: MYKEY, DeBank
The number of holding addresses of USDT, USDC, PAX, TUSD, and DAI increased by 54,287, 4,644, 165, 311, and 4,078.
The Number of Active Addresses
Source: MYKEY, Coin Metrics
The number of active addresses of stablecoins last week decreased by an average of 6.2% compared to the previous week, mainly due to the low number of active addresses on July 18.
The Number of 24-hour Transactions on the Public Blockchains
Source: MYKEY, Coin Metrics
Compared with the previous week, the number of daily transactions of major stablecoins increased by an average of 0.31%.
The Number of 24-hour Volume of Transactions on the Public Blockchains
Source: MYKEY, Coin Metrics
Source: MYKEY, Coin Metrics
Compared with the previous week, the daily volume of transactions of major stablecoins last week increased by an average of 13.94%. The proportion of the volume of transactions of DAI increased, while the proportion of the volume of transactions of USDT decreased.
2. Ampleforth with 51 times income in a month
In the last stablecoin report, we introduced a stablecoin Terra with 1.76 million users. In this issue, we will introduce a stablecoin project Ampleforth. At present, Ampleforth has a market capitalization of $580 million, successfully surpassing Maker and ranking 27th on CoinMarketCap.
AMPL is a synthetic commodity currency, which is classified as an algorithmic stablecoin according to the classification of stablecoin. We know that any stablecoin needs a certain mechanism to ensure that the price of the stablecoin is anchored to the legal currency. For example, when the price of DAI is higher than $1, holders of MKR can vote to increase the types of mortgage assets, increase the upper limit of DAI, and reduce the stability fees. These measures can increase the supply of DAI and bring the price of DAI back to around $1.
Ampleforth will also increase or decrease the supply of AMPL through certain measures to bring the price of AMPL back to around $1, but the approach is different from common stablecoins. AMPL protocol can automatically adjust supply according to demand. When the price is too high, the wallet balance of all users increases, and when the price is too low, the wallet balance decreases. Throughout the process, the proportion of AMPL held by users will not change. AMPL does not allow price fluctuations at all, it is only when fluctuations exceed a certain threshold that the process of balance increase or decrease occurs. According to the description in the white paper, this threshold δ is set to 5%, and Pt is the target price.
Source: Ampleforth white paper
Ampleforth believes that this way can reduce its connection with the cryptocurrency market, but it may not be the case. Let’s take a look at the data for the past month. From June 23 to July 23, the circulation of AMPL increased from 5.61 million to 150 million, the price increased from $1.01 to $1.98, and the circulating market capitalization increased from $5.67 million to $296 million. It can be calculated that the income of holding AMPL this month is 51.28 times, but the price of AMPL has only doubled. It can also be seen from the figure below that although the price of AMPL is around $2.5 and the market capitalization has also decreased, the circulation has almost always been increasing. The monthly circulation increased by 25.67 times.
Source: MYKEY, CoinMarketCap
To avoid unnecessary over-correction, the increase or decrease of the supply of AMPL is not achieved overnight, but a smooth process. The AMPL protocol executes the supply change by reference to the volume-weighted average price over the last 24 hours and divides the difference between the weighted average price and the target price by 10 to get the magnitude by which the supply should change.
When the price of AMPL is $1.5, the wallet balance of AMPL will increase by 50%/10, that is, an increase of 5%
When the price of AMPL is $0.5, the wallet balance of AMPL will decrease by 5%.
The supply of AMPL is readjusted at 10 AM every day, and there is a once-a-day arbitrage opportunity between Uniswap and other Exchanges. When the supply of AMPL changes, the AMPL reserve in Uniswap will automatically adjust, and the relative value of AMPL and ETH will also change, and the price of AMPL on Uniswap will automatically change. In centralized Exchanges (such as Bitfinex), the change in the quantity of AMPL takes time to settle and the price needs to be adjusted artificially. If you have balances on Uniswap and Bitfinex, you can buy them on Exchanges with low prices and sell them on Exchanges with high prices to complete arbitrage transactions. The liquidity and volume of transactions of the ETH-AMPL exchange pairs steadily rank first on Uniswap, showing the extent to which Uniswap affects the price of AMPL. As can be seen from the figure below, the price on Bitfinex will fall after 10 AM every day, which may be affected by arbitrage transactions.
Source: bitfinex.com
It should be noted that some centralized Exchanges will close trading, deposits, and withdrawals before and after the daily readjustment of the number of AMPL. Some Exchanges do not even directly perform readjustment operations. Investors need to understand relevant rules in advance.
AMPL is designed to be a relatively stable currency, but it is always easy to deviate from $1 in the actual process. When the price fluctuates, the income will be magnified because of the same change in the liquidity. From the perspective of the stablecoin, AMPL is very impractical. Even if AMPL achieves price stability, it does not necessarily make sense. For example, the price of AMPL has been around $2.3 recently, but the number of AMPL has increased by 13 times compared to 20 days ago.
From the above analysis, we can also draw some empirical conclusions:
In the current situation of high prices, the completion of the readjustment of the circulation at 10 AM is likely to cause a larger price decline, which may exceed the proportion of the increase in the AMPL balance.
Assuming a weighted average price of $2.50 on the day, the incomes will not be affected if the price falls by 15% after the readjustment.
Arbitrage between Uniswap/Bitfinex is theoretically feasible.
The benefits and risks of AMPL may be relatively large and the above contents are not considered as investment suggestions.
3. Questions of Readers
Question 1. What payment scenarios are Terra mainly used for?
Answer: Terra is mainly used in scenarios where payments are made in won. There are several points of evidence.
1) The historical total volume of transactions of KRT (the price of KRT is the same as won) is 1.46 trillion, which is converted into US dollars for a total of $1.22 billion. The historical total volume of transaction of Luna is 1.673 billion, which is converted to US dollars for a total of $650 million at the current price. The proportion of the volume of transactions of KRT is high.
2) The circulating market capitalization of TerraKRW (KRT) has reached $63.38 million, ranking 232th in CoinMarketCap.
3) The founder of Terra is the founder of South Korea’s second-largest e-commerce company.
Tips
To better communicate with industry insiders, we decided to add two sections for questions of readers and opinions of guests. If readers have questions about stablecoins, please contact us. We will pick meaningful questions to answer in the next issue. At the same time, welcome guests from the industry to share your views on stablecoins. Contact information: jianghb@mykey.org.
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 03: Where are the users of DAI?
Crypto Stablecoin Report 07: Security Analysis of Stablecoins
Crypto Stablecoin Report 08: Interpretation of Digital Dollar Project
Crypto Stablecoin Report 09: Analyze the lending leverage of Compound
Crypto Stablecoin Report 10: Introduce the Algorithmic Stablecoin Project Terra (Luna)
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