Stablecoins are an integral part of the crypto market as they are the haven that protects them from dangers like high volatility. As per the reports from Huobi, stablecoins have been more than just a hedging tool and helped bring more assets into DeFi lately. They have greatly accelerated the growth of the crypto sector by increasing institutional participation. These are why the crypto firms are getting keener to release their very own stablecoins.
Although there are hundreds of stablecoins anchored to fiat currencies and commodities, USDT has remained steadfast at the top so far. Now, the annual outlook reports from Huobi confirm that USDT’s supremacy is under threat from the growth of the USDC stablecoin. The latter’s better regulatory position and DeFi capabilities have made it famous as the sector is witnessing a gradual increase in institutional participation. Based on such reasons, the exchange claimed that USDC could get to the top of the stablecoin sector.
Tether’s USDT, however, is still the leading stablecoin in the market. The reports have merely recognized a change in the trend of these coins. In recent times, institutional interest has sparked the demand for a stablecoin that could balance regulatory needs and DeFi opportunities. The changing trend has helped USDC exceed half of USDT’s market cap and continues to grow. While USDC gets the favor of institutions, other stablecoins like BUSD, UST and DAI have also made it to the top 30 in the crypto market in terms of their market cap.
The arrival of DeFi, combined with recent global events like the Ukraine invasion and the Canadian trucker protests, has badly damaged the institutional trust. Moreover, the new generation seems more interested in financial freedom, just like breaking out of other constructs. If that is the case, the stablecoins will continue to grow long-term as people are looking for stable DeFi alternatives for their centralized assets. Aside from USDT and USDC, other stablecoins like DAI and UST are also moving towards better futures in the sector. Huobi hopes that the coming years will see more innovation in stablecoins.
But we do not have to wait for years to see the innovation as there are already several stable coin projects anchored to physical assets and commodities like real estate and gold. These projects also invest much interest in becoming eco-friendly and carbon-negative.
The sector, however, received some backlash in January due to liquidation issues found in several DeFi platforms. Nonetheless, platforms like Aave, MakerDAO, Uniswap, and Curve have been impressive, with a collective locked volume of $10 billion. Like Convex, Instadapp, and Lido, a few less-known projects have also shown great potential in the Huobi annual report. The sector collectively accounted for $238.41 billion in total locked-in assets, a 1,245% increase from the previous year.