Insights Stablecoins & DeFi: the story so far

Stablecoins & DeFi: the story so far

Jul 25, 2020

The news of Tether’s total supply ballooning over $1bn earlier this week helped pivot the market’s attention away from the ongoing DeFi craze and back towards stablecoins, if only for a fleeting moment.

In fact, the two talking points are now intrinsically linked. While the explosion in stablecoin demand following the ‘Black Thursday’ crash had mostly been rationalized by market participants fleeing to less volatile assets, the latest surge in stablecoin-related activity is directly tied to the proliferation of decentralized finance solutions and the ‘yield farming’ mania.

As Sam Bankman-Fried recently concluded in an excellent thread on the current state of lending protocols, ‘most of DeFi right now is people locking, trading and lending stablecoins against each other’

The above becomes demonstrably apparent when analyzing the recent on-chain activity of the four stablecoins tied to most of today’s DeFi initiatives

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