Stablecoins volume on Ethereum reaches an all-time high despite market uncertainties

Recent data reportedly indicated that total Ethereum unfiltered on-chain transaction volume in August hit an all-time high of about $1.46 trillion. The data also highlighted that stablecoins transaction volumes have increased twice as much since the beginning of the year.

Ethereum’s on-chain data indicated about $652 billion in stablecoin transaction volumes in January. Since then, the volumes have fluctuated, with the second-highest record in April, where transaction volumes hit $1.18 trillion.

The stablecoin that recorded the highest volumes was MakerDAO’s DAI, which was $962.32 billion. The surge in DAI transaction volumes was allegedly caused by increased investor interest in decentralized finance. The analysis also speculated that the increased interest in DAI could indicate increased trust in algorithmic stablecoins.

Tether’s USDT and Circle’s USDC followed with $265.84 billion and $209.98 billion, respectively. According to the same data, USDT and USDC still hold significant power over the markets, and their infrastructure contributed to DeFi’s progression.

The two stablecoins still allegedly performed better than DAI in Ethereum’s filtered on-chain stablecoin volumes. The figures were speculated to indicate massive transfers or wash trading.

PayPal’s PYUSD records notable growth

8. $PYPL

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EV/EBITDA: 11.3x

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With innovative products, $PYUSD, cost cuts, revenue growth, and a new ads business that will top the likes of $UBER ad business, the bullish catalysts… pic.twitter.com/nkW5uf9K2b

— Oliver | MMMT Wealth (CPA) (@MMMTwealth) September 2, 2024

While PYUSD was not among the top 5 stablecoins that contributed to Ethereum’s high transaction volume, it has been recording significant growth since its launch. On-chain data showed that PYUSD’s volumes grew from $500 million to about $2.4 billion.

PayPal has been making strategic partnerships with different companies to ensure the success of its stablecoin. In August, the company introduced a PYUSD reward program in partnership with Anchorage Digital. The reward system allows users to earn without lending, staking, or reusing assets.

“Crypto innovators want to put their treasury cash to work but cannot compromise on asset security or accessibility. That’s why Anchorage Digital is proud to work with PayPal,…”

Nathan McCauley, CEO and Co-Founder of Anchorage Digital

At the time of writing, the stablecoin’s 24-hour trading volume is at $30.546 million, up approximately 10% in the past 24 hours.

Stablecoins remain the lifeblood of DeFi

The Block’s Insights newsletter revealed that stablecoin’s increased usage could indicate a maturing ecosystem. According to The data, the increased transaction volumes could also indicate deeper liquidity pools, less slippage, and better market efficiency.

For DeFi, stablecoin functionality and healthy markets are necessary for the coins’ power to fuel lending, yield farming, liquidity pools, and more. Therefore, a surge in transaction volumes and stablecoin usage could indicate healthier DeFi ecosystems.

The Block’s speculations match Paxos’ belief in stablecoins’ contribution to DeFi markets. In a June blog, Paxos outlined some advantages stablecoins have in DeFi ecosystems, including reducing price volatility, more accurate execution of smart contracts, store of value, and more.

The newsletter, however, explained that while coins like USDT and USDC remain dominant, newer stablecoins are creating competition. The data revealed greater innovation within the stablecoin industry, improving business models, designs, governance, and use cases.

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