The supply of stablecoins has doubled in just 24 months, creating a stark divide between major Layer-1 blockchains as they compete for capital inflow.
This trend not only affects price differentiation among Layer-1 blockchains but also stimulates competition for liquidity, driving DeFi activities and changing the nature of network development.
KEY CONTENT
Global stablecoin supply has surged, with major issuers controlling 96% of the market share.
Layer-1s like Ethereum, Tron, and Solana lead in attracting stablecoin flows, directly impacting the token prices of their networks.
Stablecoin flows create significant price differentiation among Layer-1 blockchains, with Ethereum recording the most notable increase.
How has the supply of stablecoins changed in the past 24 months?
The supply of stablecoins has more than doubled in the last two years, from 130 billion USD to 270 billion USD according to early 2024 data.
This growth momentum largely stems from significant regulatory frameworks, market share increases, and domestic stablecoin projects tied to national currencies. According to Token Terminal data, only four major issuers currently hold up to 96% of the market share.
Tether (USDT) continues to be a liquidity pillar, while Circle (USDC), Ethena (ENA), and Sky (SKY) account for the rest, forming a group that controls nearly the entire supply of stablecoins in the global market. This is reshaping the cryptocurrency market, especially in the Layer-1 blockchain group.
Which Layer-1s are leading in the race to attract stablecoins?
Ethereum and Tron are dominating by controlling a total of 90% of the stablecoin supply, while Solana surpasses the 10 billion USD mark, ranking third in stablecoin absorption speed.
The current situation shows that since 2018, major blockchains have continuously attracted stablecoin flows to enhance liquidity, drive DeFi activities, and decentralized trading. Ethereum, with its developed DeFi ecosystem, remains the top destination for large capital flows, while Tron has seen remarkable growth thanks to its fast processing speed and low transaction fees.
Additionally, smaller chains and Layer-2 such as BNB Chain, Avalanche, Arbitrum One, Base, and zkSync Era are also gradually catching up with the pace of network expansion and attracting stablecoins, although their scale is still limited compared to the top 3.
Does the stablecoin race among Layer-1s affect the price volatility of native tokens?
Clearly, the stablecoin gap between major Layer-1 blockchains creates a strong price differentiation, as significant liquidity means increased buying demand, driving token prices up.
AMBCrypto's report emphasizes: “Analyzing price fluctuations across blockchains validates that stablecoin capital flow plays a key role in forming L1 token prices.”
– AMBCrypto, 2024, source: https://www.ambcrypto.com/
Essentially, any blockchain that maintains a large stablecoin supply will retain more liquidity for DeFi activities, staking, and trading, increasing buying pressure and the corresponding token price. In fact, stablecoin capital is the starting point for vibrant financial activity cycles on each network.
Thus, the differentiation in stablecoin market share has become a decisive factor for each Layer-1’s strong or stagnant growth cycle, creating a significant disparity in investment yields and the native token price volatility of each network.
Practical data on stablecoin flows, price effects on each Layer-1?
On-chain statistics show a tight correlation between stablecoin flow and native token price performance. Tron, this year alone, attracted nearly 20 billion USD in stablecoins, raising its total supply to a record 82 billion USD and pushing the price of TRX up nearly 80%, reaching 0.36 USD with nine consecutive weeks of increases.
In contrast, Solana only added about 8 billion USD in stablecoin supply on its network, but the price of SOL decreased by 2% compared to the opening of the year at 213 USD, clearly illustrating the disparity between capital flow and price effects.
Ethereum, in particular, outperformed the rest by attracting nearly 30 billion USD in stablecoins in a short time. Notably, almost 90% of this new capital flow came from May, coinciding with an explosive increase of over 150% in ETH from a baseline of 1,800 USD in Q2. This demonstrates a direct correlation between stablecoin supply and token price performance on blockchains with strong DeFi ecosystems.
Additional Stablecoin Blockchains (2024) Total Stablecoins on Network Token Price Fluctuation (%) Ethereum 30 billion USD Nearly 90% of new capital flow since May +150% Tron 20 billion USD 82 billion USD +80% Solana 8 billion USD Over 10 billion USD -2%
Why does stablecoin flow determine price differentiation between Layer-1s?
The essence of stablecoin flow is an indicator of liquidity and investor confidence in the blockchain ecosystem. When capital concentrates on one chain, that ecosystem is poised to break through in terms of asset prices, scale, and DeFi activity.
“Stablecoins are not just a means of transaction – they are indicators of trust and the foundation for the long-term success of blockchain.”
– Token Terminal Report, 2024
The concentration of 90% of stablecoin supply in Ethereum and Tron explains why these Layer-1s consistently lead in transaction scale, total value locked (TVL), and are favored in new capital flows. In contrast, blockchains with low stablecoin flows will struggle to activate new financial trends, causing their token prices to fluctuate unfavorably.
Overall, stablecoins have been and continue to be a strategic weapon that establishes the position of leading blockchains during a period of strong cryptocurrency development.
Frequently Asked Questions
Why is the strong increase in stablecoin supply important for the blockchain market?
The strong increase in stablecoin supply helps boost liquidity across multiple blockchains, driving DeFi activity and causing capital flows to concentrate on major networks, altering the development dynamics of the entire market.
Which blockchain is currently attracting the most stablecoins?
Ethereum and Tron currently control up to 90% of the total global stablecoin supply, playing a decisive role in liquidity competition among Layer-1s.
How does stablecoin flow affect the price of native tokens on blockchains?
When a blockchain attracts a large amount of stablecoin, liquidity increases, leading to greater demand for the native token, resulting in more favorable price fluctuations in an upward direction.
Is Solana successful in attracting stablecoins like Ethereum and Tron?
Solana has surpassed the 10 billion USD stablecoin mark on its network, but the price increase of the SOL token is not yet evident, as the capital flow remains lower than that of Ethereum and Tron.
What factors help Ethereum excel in attracting stablecoins and achieving price breakthroughs?
Ethereum has the most developed DeFi ecosystem, receiving 30 billion USD in stablecoins just from May 2024 and recording an ETH price increase of over 150% from a solid baseline.
Source: https://tintucbitcoin.com/stablecoin-chi-phoi-gia-layer-1/
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