Stablecoin Turmoil: $1.53 Billion Redeemed in a Month Amid Declining Trade Volume

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Stablecoin Turmoil: $1.53 Billion Redeemed in a Month Amid Declining Trade Volume

In the brief span from July 12, 2023 to August 6, 2023, the stablecoin economy witnessed a staggering loss exceeding $1.53 billion in value. Among the premier ten stablecoins, Pax’s pax dollar (USDP) experienced a redemption of 39% of its supply over the preceding 30 days.

Unstable Times for Stablecoins: Major Players Hit with Sweeping Redemptions

Resembling the descending rhythm of a limbo contest, the stablecoin market keeps spiraling lower. In the timeframe between July 12, 2023 and August 6, 2023, a substantial wealth evacuated the stablecoin market. News chronicled the situation in the stablecoin economy on July 12, noting that the ten days prior had seen an exodus of $890 million. The ensuing 25-day period was marred by continued redemptions, resulting in $1.53 billion being redeemed and vanishing altogether. Six of the top ten stablecoins by market valuation endured supply losses over the last 30 days.

Defying the trend, tether (USDT) emerged as one stablecoin that successfully resisted massive redemptions, maintaining a circulating supply of 83.90 billion USDT on August 6, and even witnessing a 30-day supply uptick of approximately 0.3%. Conversely, the second-largest stablecoin, usd coin (USDC), parted with 5.6% of its supply over the previous month, while DAI’s supply retreated by 5.9%. BUSD was plagued by sweeping redemptions, erasing 16% of its supply in the last month, and true usd’s (TUSD) supply contracted by 1.6%.

Frax dollar (FRAX) experienced a contraction in its supply by 19.3%, while in contrast, Tron’s USDD enjoyed a modest 2% growth. In the same vein, Pax’s pax dollar (USDP) declined by 39% over the last month, and gemini dollar (GUSD) had nearly 36.1% of its supply removed. On a more positive note, liquity usd (LUSD) marked a 1.1% increase, and the 11th largest stablecoin by market valuation, FDUSD, astonishingly expanded its stablecoin supply by a whopping 20,000% in just a week. Of the global crypto trade volume totaling $23.49 billion, stablecoins contributed $8.89 billion, signifying that stablecoin trading pairs constituted 37.84% of the worldwide trade volume on Sunday.

Within the bustling environment of decentralized exchange (dex) platforms, stablecoins play an active role, with USDC, DAI, and USDT standing out as the leading stablecoins utilized in today’s top dex protocols. For example, Uniswap v3 prominently features trading pairs such as WETH/USDC, WETH/USDT, and DAI/USDC. Beyond Uniswap, stablecoins are heavily engaged in Curve Finance pools and enjoy widespread use on other platforms like Pancakeswap, Trader Joe, and Sushiswap.

Despite their participation on decentralized exchanges, stablecoins have been confronted with not only notable declines in supplies but also a substantial reduction in trade volume. As it stands, the future remains veiled in uncertainty, leaving observers to ponder whether the stablecoin downturn will persist or eventually reverse course at some unforeseen juncture.

What do you think about the downtrend the stablecoin economy has faced in recent times? Share your thoughts and opinions about this subject in the comments section below.

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