The world’s largest stablecoin by market capitalization and usage is edging closer to replicating its May 2022 level of $83.2 billion. Analysts attribute the growth to increased minting on Tron as the primary driver.
Tether Capitalization Moves Closer to Match highest Levels
A scrutiny of Tether’s market capitalization shows it’s moving closer to the previous year’s levels, with CoinMarketCap showing it attained $83.06 billion. A recent analysis by the blockchain-based analyst firm Kaiko discovered rising supply without a surge in trading volume.
Further assessment shows that Tether has become a mainstay element facilitating trading within the centralized exchanges. Kaiko analysis shows Tether commands half of the market activity, with the rest shared among other stablecoin pairs. Nonetheless, USDT plays catchup with a 20% market share on the decentralized exchanges.
Discontinuation of Binance’s BUSD Benefits USDT
Kaiko analysis rules out the rising market capitalization of Tether correlating with the USDT trading volumes. The finding is justified by reviewing Circle’s stablecoin trading and supply volume.
A comparative assessment of USDC stablecoin casts it as a trading pair with volume decline matched by decreasing market capitalization. The sharp contrast affirms the anomaly observable in Tether’s market capitalization trend.
The growth realized in USDT market capitalization partly arises from the discontinuation handed to Binance-Paxos BUSD stablecoin in March. This coincided with the famous depegging suffered by USDC in March, triggering an exodus to USDT.
Also read:Kaiko analysis revealed that USDC depegging and BUSD discontinuation only accounted for a partial explanation for the rising capitalization for Tether. As such, the investigation admitted to explaining the $15 billion increase witnessed in 2023.
The possible reason for Tether’s climbing market capitalization is the sustained growth of the Tron network. Kaiko indicates that the soaring Tether’s numbers arise from stablecoin supply that is notably higher than on Ethereum.
Minting on Tron Pushes USDT to Record Levels
Kaiko’s findings echo the DefiLlama observations that the increased minting on Tron is responsible for the higher Tether cap rise. DefiLlama estimates the total value locked (TVL) as $5.72 billion on Tron. Most of the TVL is from three DeFi applications, including SUN, JustStables, and JustLend, with 99%. A review of Ethereum TVL reveals $27.53 billion, while 10 protocols each have deposits exceeding a billion dollars.
Coinmetrics data indicate steep growth in the USDT supply on the Tron network. It estimates that approximately $46 billion USDT is issued on the Tron network, while Ethereum accommodates $36 billion.
The analysis completed by Kaiko shows USDT issuance on other blockchains. The assessment revealed Near, Omni Avalanche, and Solana, each with USDT not exceeding $2 billion.
Kaiko observed that the huge USDT balance on Tron is attributed to the offshore exchanges, including OKX and Binance. The analysts indicate that whales and market makers greatly prefer Tron. The preference arises from the low transaction fees.
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