Stablecoin Rush Breaks Out; JPMorgan, DBS and Temasek Launch Partior

Stablecoin Rush Breaks Out; JPMorgan, DBS and Temasek Launch Partior

As the Coinbase public listing approached, many analysts were looking for a $100 billion valuation. The cryptocurrency exchange, founded by Brian Armstrong and Fred Ehrsam, hit that mark briefly after listing, but COIN has settled down to a less-rarified valuation.

Meanwhile, CoinGecko calculates a total market capitalization of $128 billion for decentralized finance (DeFi), the corner of the cryptocurrency industry that represents a wide range of lending, trading and betting activities carried out almost entirely on blockchain networks using tokens as proceeds and collateral. The top five tokens on CoinGecko’s list are UNI, LINK, LUNA, AAVE and CAKE.

The following chart is from a CoinGecko page that tracks the combined market cap of all DeFi tokens:

Related: Stablecoin Rush Breaks Out; JPMorgan, DBS and Temasek Launch Partior

Coinbase, it should be noted, listed DeFi as a potential competitor when it filed for a public listing, but for whatever reason, market caps aren’t how we usually talk about the DeFi market. We usually talk about the value of assets people have deposited in DeFi apps to earn yield.

But that measure gives a similar reading: There is now more than $100 billion worth of assets locked up in DeFi.

These get to be very large numbers, numbers that are worth reviewing to illuminate a story that somehow continues to be missed even as cryptocurrency has started going mainstream.

Here at CoinDesk we have focused on DeFi on Ethereum because DeFi originated on Ethereum, and it is where the best-known entrepreneurs have committed to operating.

Related: Paxos Joins Crypto Unicorn Club After Latest $300M Funding Raise

Those aforementioned deposited assets are referred to as total value locked (TVL). TVL on Ethereum, using the most widely cited data site, DeFi Pulse, is $66 billion as of this writing, more than quadrupling since Jan. 1 when it was $15 billion.

Meanwhile, DeFi has taken off in a big way on Binance Smart Chain (BSC). According to Defistation, the current TVL on there is $38 billion, led by PancakeSwap but also including money markets filling a similar role to Aave and derivative solutions that fill a similar role to dydx.

Story continues

DeFi on BSC has grown much faster than on Ethereum; it first hit $1 billion in TVL only at the end of January.

DeFi vs. ICOs

Here’s a chart that compares funds entrusted to Ethereum’s many DeFi smart contracts in the last year or so to funds that went to founders in initial coin offerings during the 2017-2018 boom (an updated version of one published here):

It should be noted that DeFi Pulse was in the midst of updating how it tracks the TVL for the robo-adviser for yield, Yearn Finance, when this was made, and so those numbers aren’t in this graph. According to Yearn itself, though, it has had several billion dollars tied up.

Read more: DeFi reshapes the CoinDesk 20

While the 2020 surge was known as “DeFi Summer,” it’s already evident the market is much bigger now.

For example, TVL first broke $1 billion in February 2020. It broke $10 billion in September, on Ethereum. Earlier this month, the money market platform Compound broke $10 billion in TVL all on its own.

Tuesday night, the original DeFi protocol, stablecoin minter MakerDAO, also broke $10 billion for the first time.

1 million users? Maybe 2 million?

Richard Chen, at the venture firm 1confirmation, has been assembling on-chain data about users using Dune Analytics. One chart is worth citing here in particular.

This shows there are at least 2 million wallets that have interacted with DeFi protocols. So that probably means something like more than a million individuals, maybe even close to two? It’s very hard to say, but it is also worth noting that sometimes individuals participate in DeFi via third parties. So while some users hold many wallets, it’s also true that some wallets represent many users.

Whatever the real count of users, the amount of money changing hands shows these applications are real businesses. The site Crypto Fees has been tracking usage fees charged on different DeFi applications. The top DeFi applications it lists (Uniswap, SushiSwap and Compound) show a seven-day average of daily fees collected ranging from $1 million to $4 million.

If there’s one kind of finance that everyone understands, it is lending. The blockchain software company ConsenSys just released a first-quarter report on DeFi on Ethereum, showing a growing market for loans:

DeFi represents a much more credible narrative with more substantive businesses because it shows products with genuine returns and provides a way for people to earn impressive yields on deposits rather than making wild bets and hoping.

Wild bets are the best way to describe much (though certainly not all) of the investing that took place in the initial coin offering boom of 2017 to 2018. That boom drove the prior bull run, and the public appeared capable of making that connection.

Four years later, the cryptocurrency industry is in a bull run again, but the public appears incapable of connecting it to these billion-dollar deposits into this new iteration on finance. For whatever reason, the main topics are, again, bitcoin’s price and, somehow, non-fungible tokens and dogecoin.

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Tether Releases Consolidated Reserves Report, Backing $50B in Assets

Popular stable coin company Tether has released its consolidated reserves report, backing all USDT.

Tether has released its most recent independent assurance opinion that confirms the company’s reserves are fully backed.

The report which has been verified by independent accountants Moore, clarifies that Tether are in fact fully backed. The report from Moore states Tether currently holds consolidated assets amounting to $41 billion as of 31 March 2021.

Moore also states that Tether’s consolidated assets exceeds its consolidated liabilities, meaning the company’s reserves that are held for its digital assets issued exceeds the amount required to redeem the digital asset tokens issued.

USDT backed by company assets

Moore concludes “We believe that the evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our assurance opinion”.

The news is a big step forward for Tether, who have been criticized in the past for not holding any monetary value while continuously printing more Tether (USDT).

Tether has seen tremendous growth over the past several months as the crypto market grows exponentially.

Exponential growth due to TRON expansion

Most recently, the company announced that it has surpassed the $50 billion market capitalization. The rapid growth for a stable coin such as USDT has been credited to its diversification across multiple blockchains. Tether was originally only an ERC-20 token. However its shift to add the TRON network token has seen massive expansion.

Due to high transactional fees on the ethereum blockchain, the Tron backed USDT recently surpassed the supply of its native ERC-20 token. USDT on TRON stands at $26 billion, while the ethereum USDT currently accounts for just over $24.4 billion.

The report confirms that the digital asset USDT is fully backed by company reserves. With Tether commenting on the Consolidated Reserves Report, saying “Today’s publication reflects our continued dedication to making this information public as part of our ongoing commitment to transparency and setting the standard in our industry. We embrace that commitment to our community”.