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šŸ’„Stablecoin Adjusted On-Chain Volume Reaches New Highs, Are They Threatening Financial Stability?šŸ’„
September 19, 2022
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Stablecoins continue to break into the mainstream due to their use in settling cross-border payments and in the process reached a new milestone in adjusted transaction volume in August.

StablecoinsĀ have become a major part of theĀ decentralized financeĀ industry after their launch in 2014. The use of stablecoins in cross-border transactions is far cheaper and faster than in centralized systems.

This has led to an adjusted on-chain volume of approximately $866 billion throughout August.Ā 

In August of 2021, the crypto market bounced back from a brief bearish period that began three months prior. It was during this time that due BTC was removed as a payment method forĀ Tesla-related products. In terms ofĀ stablecoinĀ volume, August 2022 was an 86% year-over-year (YoY) gain from August 2021’s figure of $464 billion.Ā Ā 

Stablecoin volume reached an all-time high in August

In May 2021, the market stalled soon afterĀ EthereumĀ (ETH),Ā Internet ComputerĀ (ICP), and other digital assets reached then all-time highs. As investors sought to exit positions and trade assets, stablecoin usage became more popular. As a result, adjusted on-chain volume for May 2021 was roughly $766 billion led byĀ Tether’sĀ (USDT) share of $463 billion.Ā 

AnotherĀ market declineĀ followed in May 2022, exacerbated by the collapse of the algorithmic stablecoin, TerraUSD (UST (currently USTC)), and a wider crackdown of digital assets by China and other crypto-unfriendly countries. Investors moved to stablecoins again causing a spike in adjusted on-chain volume to about $808 billion. While still being a lower volume than April, May 2022’s figure marked a 5% increase year-over-year.Ā 

Despite volume plunging to $668 billion in July, the adjusted on-chain volume of stablecoins reached a peak of $866 billion in August.Ā USDC, USDT,Ā DAI, and BUSD made up a majority of the volume.

Soaring transaction counts

USDCĀ had the lion’s share in volume with roughly $353 billion, corresponding to 41% of the total volume. The total transaction count for August was 1.8 million, a ~6% increase from July’s 1.7 million.Ā 

USDT came in second place at around $258 billion, representing 30% of the total on-chain adjusted volume. The total transaction count for August 2022 was 41 million, a 5% increase from July’s figure of 39 million.

BUSDĀ adjusted on-chain volume for August was $21 billion, corresponding to 2% of total volume. BUSD transaction count clocked in at 50,561.

DAI moved up the ranksĀ 

DAIĀ which reached a then all-time high of $218 billion in adjusted on-chain volume in December 2021 plummeted in the first seven months of 2022, generating around $140 billion.

Contributing 27% of total volume, the Ethereum-based stablecoin shot back to $234 billion in August.

Are stablecoins a threat to the stability of centralized finance?Ā 

Reaching more than three-quarters of a trillion dollars in volume has raised eyebrows in the industry. Addressing an audience at the Brookings Institution in Washington, D.C.,Ā Michael Barr, the Vice Chair for Supervision of the Board of Governors of the Federal Reserve System said, ā€œStablecoins, like other unregulated private money could pose financial stability risks. History shows that in the absence of appropriate regulation, private money is subject to destabilizing runs, financial instability, and the potential for widespread economic harm.ā€Ā 

ā€œI believe Congress should work expeditiously to pass much-needed legislation to bring stablecoins, particularly those designed to serve as a means of payment, inside the prudential regulatory perimeter,ā€ he added.Ā 

With Barr’s submission at the event titledĀ Making the Financial System Safer and Fairer, stablecoins could be seeing new regulatory oversight in the not-too-distant future.Ā 

BinanceĀ CEOĀ gives his thoughts

Speaking at Binance Blockchain Week Paris 2022 on Sept. 14, Chanpeng Zhao, founder, and CEO of Binance exchange made it known that the Market in Crypto Assets (MiCA) regulation by the European Union (EU) is a little bit strict on stablecoins.Ā 

ā€œThe drafts are not adopting USD-based stablecoins, which have 75% of the liquidity in the market,ā€ said Zhao.Ā 

Searching for answers to whether stablecoins are a threat to the global financial system, Be[In]Crypto reached out to Slava Demchuk, CEO of AMLSafe, PureFi, and AMLBot, an anti-money laundering (AML) program that checks crypto wallets for illicit funds.Ā 

ā€œStablecoins have become an essential part of the crypto economy, as well as the ā€œclassicā€ economy in some developing countries, complementing fiat payment methods. Stablecoins have clear advantages for their users – easy and cheap to store and transfer, exposure to fiat–denominated currency (such as USD, which is very important in the places where access to USD is limited), etc. However, some types of the stablecoins, such as the algorithmic ones, have recently created a disaster on the market by actually being very ā€œunstableā€ and causing billions of losses for the crypto community. The other issue with not only stablecoins but all of the cryptocurrencies is money laundering and terrorist financing, which is actually fueled by the ease with which they can be obtained and transferred,ā€ said Demchuk.Ā 

ā€œWith that in mind, I tend to believe that stablecoins are rather beneficial than posing a threat to the global financial system. They provide a flight to safety for the ones in the developing countries with highĀ inflationĀ increasing global inclusiveness in the global financial system. In addition, it becomes increasingly harder to conduct illegal activities using stablecoins – the tokens can be frozen or blacklisted by the eminent. Then, numerous crypto AML solutions analyze wallets and transactions to provide a risk score and sources/connections making it close to impossible for the bad actors to launder or hide the funds,ā€ he added.Ā 

Demchuk concluded, ā€œFurthermore, stablecoins can and will be regulated ultimately protecting their users from collapses as seen recently. At the end of the day, the stablecoins themselves are just tokens backed up by a fiat currency (such as USD), which should already relieve some Fed officials.ā€

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US Dept of Commerce to publish GDP data on blockchain

On Tuesday during a televised White House cabinet meeting, Commerce Secretary Howard Lutnick announced the intention to publish GDP statistics on blockchains. Today Chainlink and Pyth said they were selected as the decentralized oracles to distribute the data.

Lutnick said, ā€œThe Department of Commerce is going to start issuing its statistics on the blockchain because you are the crypto President. And we are going to put out GDP on the blockchain, so people can use the blockchain for data distribution. And then we’re going to make that available to the entire government. So, all of you can do it. We’re just ironing out all the details.ā€

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List Of Cardano Wallets

Well-known and actively maintained wallets supporting the Cardano Blockchain areĀ Eternl,Ā Typhon,Ā Vespr,Ā Yoroi,Ā Lace,Ā ADAlite,Ā NuFi,Ā Daedalus,Ā Gero,Ā LodeWallet,Ā Coin Wallet,Ā ADAWallet,Ā Atomic,Ā Gem Wallet,Ā TrustĀ andĀ Exodus.

Note that in case of issues, usually only queries relating to official wallets can be answered in Cardano groups across telegram/forum. You may need to consult with specific wallet support teams for third party wallets.

Tips

  • Its is important to ensure that you're in sole control of your wallet keys, and that the keys used can be restored via alternate wallet providers if a particular one is non-functional. Hence, put extra attention toĀ Non-CustodialĀ andĀ CompatibilityĀ fields.
  • The score column below is strictly a count of checks against each feature listed, the impact of specific feature (and thus, score) is up to reader's descretion.
  • The table represents current state on mainnet network, any future roadmap activities are out-of-scope.
  • Info on individual fields can be found towards the end of the page.
  • Any field that shows partial support (eg: open-source field) does not score the point for that field.

Brief info on fields above

  • Non-Custodial: are wallets where payment as well as stake keys are not shared/reused by wallet provider, and funds can be transparently verified on explorer
  • Compatibility: If the wallet mnemonics/keys can easily (for non-technical user) be used outside of specific wallet provider in major other wallets
  • Stake Control: Freedom to elect stake pool for user to delegate to (in user-friendly way)
  • Transparent Support: Easy approachability of a public interactive - eg: discord/telegram - group (with non-anonymous users) who can help out with support. Twitter/Email supports do not count for a check
  • Voting: Ability to participate in Catalyst voting process
  • Hardware Wallet: Integration with atleast Ledger Nano device
  • Native Assets: Ability to view native assets that belong to wallet
  • dApp Integration: Ability to interact with dApps
  • Stability: represents whether there have been large number of users reporting missing tokens/balance due to wallet backend being out of sync
  • Testnets Support: Ability to easily (for end-user) open wallets in atleast one of the cardano testnet networks
  • Custom Backend Support: Ability to elect a custom backend URL for selecting alternate way to submit transactions transactions created on client machines
  • Single/Multi Address Mode: Ability to use/import Single as well as Multiple Address modes for a wallet
  • Mobile App: Availability on atleast one of the popular mobile platforms
  • Desktop (app,extension,web): Ways to open wallet app on desktop PCs
  • Open Source: Whether the complete wallet (all components) are open source and can be run independently.

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