6 Major Stablecoins Are Pushing Stablecoin Market Cap to a Two-Year High
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6 Major Stablecoins Are Pushing Stablecoin Market Cap to a Two-Year High
Six major stablecoins are driving the current 2024 cryptocurrency cycle.
Navigating Web3 tides with focused insightsAuthor: Sage D. Young
Translation: TechFlow
So far this year, the market capitalization of all stablecoins has grown by 30%, rising from $130 billion to nearly $170 billion—the highest level in over two years. This reflects increasing public enthusiasm for cryptocurrencies, indicating that users are increasingly willing to hold funds on blockchains rather than in traditional bank accounts.
"Global adoption of digital assets is growing, and this is part of the broader trend toward financial digitization," Paolo Ardoino, CEO of Tether, the largest stablecoin provider, said in an email to Unchained. "This trend is driven by increased demand for efficient cross-border transactions, the pursuit of financial inclusion, and the need for alternatives to traditional banking systems—especially in regions with unstable fiat currencies."
Stablecoins are tokens usable on blockchains, designed to be pegged to fiat currencies to minimize volatility. Due to their lower volatility, they are often used for daily transactions. While each stablecoin aims to maintain a peg to a specific fiat currency such as the U.S. dollar, the mechanisms for maintaining that peg vary. Some are backed by cash and cash equivalents, while others rely on crypto assets and short-term positions.
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Because stablecoin prices are designed to remain stable, their market cap serves as a strong indicator of the scale of the crypto ecosystem. Market cap shows "how many people are willing to keep money—or its equivalent—on blockchains instead of in bank accounts," said Aurelie Barthere, chief research analyst at blockchain analytics firm Nansen.
Below are the top six stablecoins by market cap, driving the current 2024 cryptocurrency cycle:
1. USDT
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Market Cap: $118 Billion
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Founded: 2014
Tether issues five different stablecoins, with USDT being the largest. Pegged to the U.S. dollar, it holds nearly 70% of the entire stablecoin market share, according to data from Nansen.
USDT's share of total stablecoin market cap grew from 48% at the beginning of 2023 to 70% now—a "huge increase," said Nansen’s Barthere.
Tether maintains the USDT-dollar peg by holding fiat currency reserves. According to its June transparency report, Tether’s reserves consist primarily of U.S. Treasury bills, money market funds, and overnight reverse repurchase agreements.
Read more: Tether Reports Record $5.2 Billion in First Half of 2024
Although Tether provides quarterly attestation reports detailing its reserve backing, it has not undergone a formal audit—a fact that has drawn significant criticism. In December last year, S&P Global Ratings' first-ever Stablecoin Stability Assessment gave Tether a score of 4 out of possible grades, the second-lowest rating.
According to DefiLlama, slightly less than 50% of USDT supply is held on the Tron network, followed by Ethereum with 39%. Despite trailing behind Tron, Ethereum sees much larger average transaction sizes for USDT compared to Tron—$38,510 versus $6,550 per transaction, according to on-chain intelligence platform Artemis.
2. USDC
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Market Cap: $33.8 Billion
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Founded: 2018
Circle’s flagship stablecoin reached a record high market cap of $55.6 billion in July 2022, but had lost more than half its value by December 2023.
The decline in USDC's market cap was largely due to the March 2023 depegging event, triggered by the collapse of two Federal Reserve-insured institutions—Silicon Valley Bank and Silvergate Bank—where Circle held a significant portion of its USDC cash reserves.
Circle’s role as a major player in the stablecoin ecosystem is also tied to its relationship with Coinbase, the largest U.S. cryptocurrency exchange. The underlying technology of USDC was co-developed by Coinbase and Circle. The exchange has also acquired equity in Circle.
Read more: Coinbase Partners With Stripe to Support USDC on Base
Coinbase is the largest holder of USDC on Base, a Layer-2 network incubated by the exchange. According to Nansen data, 20 of the top 21 USDC holders on Base belong to Coinbase, each holding $101 million worth of USDC. According to Coinbase’s latest quarterly report, the company earned approximately $437.8 million in revenue from stablecoins during the first half of 2024 (ending June 30), accounting for more than 14% of its total revenue of about $3 billion.
Two-thirds of the USDC supply resides on Ethereum, and Artemis data shows the average transaction size on Ethereum is $85,020.
3. USDS (formerly DAI)
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Market Cap: $5.3 Billion
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Founded: 2014
This Tuesday, DeFi giant MakerDAO rebranded as “Sky” and launched new versions of its stablecoin DAI and governance token MKR, with a combined market cap exceeding $7.1 billion.
Sky differs from Tether and Circle in that its stablecoin issuance is managed via a decentralized autonomous organization (DAO), where holders of the protocol’s governance token can participate in platform decisions—something Tether and Circle lack. USDS is currently the largest decentralized stablecoin.
Read more: Why MakerDAO’s Token Is Lagging Behind Others Despite Protocol’s Robust Revenue
These changes are part of the protocol’s “Endgame,” a major overhaul plan initiated in 2022. According to a governance forum post, Endgame—including the rebranding and updates to the ecosystem’s tokens—aims to make DeFi benefits accessible to a broader audience beyond early adopters.
Holders of DAI can convert their tokens into USDS, described as the “upgraded stablecoin of the Sky ecosystem.” DAI is backed by a variety of cryptocurrencies, including Ether (ETH) and Wrapped Bitcoin (WBTC).
A controversial aspect of the transition from DAI to USDS is the potential inclusion of a freeze function in the new stablecoin, allowing authorized parties to determine who can use, hold, or trade the token. Notably, Circle and Tether’s stablecoins also have similar freezing capabilities.
According to a May governance proposal, while the freeze feature will not be active at launch, governance members may vote in the future to enable it. The post states: “Future freezing functionality is expected to follow legal rules in jurisdictions where Maker requires high legal certainty, ensuring enforceability of claims on RWA collateral.”
Currently, 90% of DAI is held within Ethereum smart contracts. According to Artemis, the average transaction size is around $1.69 million, suggesting DAI is primarily used for large-scale transactions rather than by average crypto users.
4. USDe
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Market Cap: $2.9 Billion
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Founded: 2024
In less than a year, Ethena’s synthetic dollar product has reached a $2.9 billion market cap. USDe is a new type of stablecoin that uses derivatives—particularly short-term futures positions—to maintain its dollar peg. Ethena backs USDe with staked ETH, SOL, and BTC, and employs a delta-hedging strategy in derivatives markets to offset price volatility, thereby maintaining stability.
This means that whenever Ethereum drops by $1, Ethena loses $1 on its long position but gains $1 on its short position, keeping the dollar value of its collateral stable.
Read more: Ethena’s USDe Matches Solana’s Stablecoin Market Cap, Surpassing $3 Billion
Ethena’s initial rapid growth stemmed from crypto users rushing to capture high yields, which once peaked at 37%, fueled by market enthusiasm and the start of a bull run. Rewards from staking USDE come from Ethereum staking rewards and funding rates Ethena earns when traders open short-term derivative positions.
However, Ethena’s growth has significantly slowed, with its market cap dropping 20% from a July peak of $3.6 billion, as the staking yield on USDE has fallen to 4%.
For most of this year, funding rates were positive, helping Ethena offer attractive returns. But according to CoinGlass, there were multiple days in August with negative funding rates, meaning Ethena had to pay long traders—a development that reduced Ethena’s profitability and appeal.
The current average transaction amount for USDE on Ethereum is $122,460—higher than PayPal’s PYUSD, Circle’s USDC, and Tether’s USDT, though still below MakerDAO’s DAI.
5. FDUSD
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Market Cap: $2.7 Billion
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Founded: 2023
Hong Kong-based crypto custodian First Digital Group saw its stablecoin grow from an $1.8 billion market cap at the beginning of the year to nearly $2.7 billion—an almost 50% increase. FDUSD is backed by cash and cash equivalents held in accounts at regulated financial institutions in Asia.
FDUSD’s growth was boosted by promotional campaigns on Binance. From December 2023 to April 2024, Binance offered zero-fee trading for six FDUSD spot and margin trading pairs.
While over 97% of FDUSD is held on Ethereum, the remainder circulates on Binance Smart Chain. Meanwhile, blockchain data compiled by Etherscan shows that the top eight holders of the stablecoin are all Binance-affiliated addresses, collectively owning nearly 98% of the total supply.
CoinGecko shows that over the past 24 hours, the BTC/FDUSD pair on Binance recorded the highest trading volume at $1.9 billion, ahead of BTC/USDT on MEXC and Binance, which ranked second and third respectively.
6. PYUSD
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Market Cap: $1 Billion
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Founded: 2023
Fintech giant PayPal, owner of peer-to-peer payment platform Venmo, has seen its stablecoin PYUSD grow from around $234 million to $1 billion in market cap—a more than fourfold increase. PYUSD’s growth began in June 2024 when PayPal launched PYUSD on Solana, having initially debuted on Ethereum in August 2023. By August this year, the amount of PYUSD on Solana surpassed that on Ethereum, now representing 64% of its total supply.
Read more: PayPal Stablecoin Trading Goes Live on Bybit
According to a report released Wednesday by CCData, on-chain data shows that over 50% of PYUSD is used as collateral in lending protocols and as quote pairs on decentralized exchanges. One example is Kamino Finance, a Solana-based lending protocol where users can deposit PYUSD to earn a 9.94% annualized yield.
Read more: Yield Farming: What It Is and How It Works
"Over 45% of circulating $PYUSD has been deployed into Kamino," Kamino stated Monday on X in a post.
According to Artemis, the average transaction amount for PYUSD is $8,700 on Solana and $71,120 on Ethereum.
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